Manish Kothari, Ujjain V. ITO 1 (1), Ujjain

ITA 863/Ind/2018

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 4665 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-12-2020
• Assessment Year: 2013-2014
• Appeal Filed On: 02-11-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S S MANTRI
• Assessee Lawyers: ANIL KUMAR GOY AL AR
• Keywords: Unexplained cash credit; Unexplained investment; Business income; Loose papers; Opportunity of being heard; Opportunity of cross examination; Peak credit; Corroborative evidences; Accommodation entries; Reason to believe; Reassessment proceedings; Set aside; Liquidation
• Section: 143(3); 133A; 234B; 250; 264; 43; 48; 13; 22; 147; 131; 68; 69; 148; 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HON'BLE KUL BHARAT, JUDICIAL MEMBER AND HON'BLE MANISH BORAD, ACCOUNTANT MEMBER ITA NOS.286 TO 289/IND/2018 ASSESSMENT YEARS: 2008-09 TO 2011-12 REVENUE BY SHRI S.S. MANTRI, CIT APPELLANT BY S/SHRI ANIL KUMAR GOY AL, AR FOR ASSESSEE & SUMIT NEMA SR. ADV, & GAGAN TIWARY, ADV AS INTERVENER. ITA NO. 719 TO 722/IND/2017 & 862 TO 865/IND/2018 ASSESSMENT YEARS 2008-09 TO 2015-16 INCOME TAX OFFICER - 1(1), UJJAIN SHRI VARDHMAN SAKH SAHAKARITA MYDT, 133A, VIKRAMADITYA CLOTH MARKET, FAZALPURA, UJJAIN (REVENUE ) (APPELLANT) PAN NO.AAHAS9046A SHRI MANISH KOTHARI, A/3 KAMAL VILLA, ARWIND NAGAR, UJJAIN VS. INCOME TAX OFFICER - 1(1), UJJAIN (APPELLANT ) (REVENUE) PAN NO.ADBPK8153A REVENUE BY : SHRI S.S. MAN TRI, CIT ASSESSEE BY : S/SHRI SUMIT N EMA, SR. ADV, GAGAN T IWARY & PIYUSH PARASHE R, ADVS ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 2 DATE OF HEARING 05.01.2021 DATE OF PRONOUNCEMENT 11 .02.2021 O R D E R PER MANISH BORAD, AM. THROUGH ITA NO.286 TO 289/IND/2018 REVENUE IS IN A PPEAL FOR ASSESSMENT YEARS 2008-09 TO 2011-12 AGAINST THE ORD ER OF COMMISSIONER OF INCOME TAX (APPEALS) (IN SHORT LD. CIT], UJJAIN DATED 24.01.2018 FRAMED IN THE CASE OF ASSESSEE NAM ELY SHRI VARDHMAN SAKHA SAHAKARITA MARYADIT AND THROUGH ITA NO.719 TO 722/IND/2017, ITA NO.862 TO 865/IND/2018 ASSESSEE N AMELY SHRI MANISH KOTHARI IS IN APPEAL FOR ASSESSMENT YEARS 20 08-09 TO 2015- 16 AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) (IN SHORT LD.CIT], UJJAIN DATED 23.10.2017 AND 28.08. 2018. 2. AS THE ISSUES RAISED IN THESE APPEALS ARE INTERR ELATED THEY WERE HEARD TOGETHER AS PER THE REQUEST OF BOTH THE PARTIES IN APPEAL BEFORE US AND ARE THUS BEING DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. WE WILL FIRST TAKE UP THE REVENUES APPEALS VIDE ITA NO.286 TO 289/IND/2018 FOR ASSESSMENT YEARS 2008-09 TO 2011-1 2 IN THE CASE OF SHRI VARDHMAN SAKH SAHAKARITA MARYADIT. ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 3 4. BRIEF FACTS OF THE CASE AS CULLED OUT FROM THE R ECORDS AND AS NARRATED BY THE SR. COUNSEL FOR THE ASSESSEE WHO HAS COMMONLY ARGUED FOR BOTH THE PARTIES NAMELY SHR I VARDHMAN SAKH SAHAKARITA MARYADIT AND SHRI MANISH KOTHARI ARE THAT SURVEY ACTION U/S 133A OF THE ACT WAS CARRIED OUT ON 29.9.2014 AT THE REGISTERED OFFICE O F THE SOCIETY AT UJJAIN. DURING THE SURVEY IT WAS NOTICE D THAT ASSESSEE SOCIETY IS NOT FILING INCOME TAX RETURNS A ND PERMANENT ACCOUNT NUMBER WAS ALLOTTED JUST FEW MONT HS AGO. DURING THE SURVEY VARIOUS BANK ACCOUNTS OF TH E ASSESSEE SOCIETY WERE EXAMINED WHEREIN IT WAS FOUND THAT CASH AMOUNT WERE DEPOSITED ON VARIOUS DATES AND THE RE WERE CORRESPONDING ENTRIES OF CHEQUE/DEMAND DRAFT ISSUED TO VARIOUS BUSINESS CONCERNS INCLUDING COMPA NIES. THE TOTAL CASH AMOUNT DEPOSITED DURING FINANCIAL YE AR 2007-08 TO 2014-15 WERE AS FOLLOWS:- ASSESSMENT YEARS AMOUNT 2008-09 RS 9,25,93,228/- 2009-10 RS 13,90,35,137/- ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 4 2010-11 RS 17,69,03,922 2011-12 RS 26,21,59,360 2012-13 RS 41,02,21,964 2013-14 RS 57,21,56,130 2014-15 RS 85,55,76,733/- 2015-16 RS 55,54,32,696/- 5. STATEMENTS OF THE OFFICE BEARERS WERE TAKEN TO EXPLAIN THE SOURCE OF CASH AND THE TRANSACTIONS OF CHEQUES BEING ISSUED. IT WAS SUBMITTED THAT THE AS SESSEE SOCIETY GIVE FACILITY TO ITS MEMBERS/OTHER PERSON B Y WAY OF PROVIDING CHEQUES/DEMAND DRAFTS TO BE ISSUED TO VAR IOUS PARTIES ON THE DIRECTION OF THEIR MEMBERS AGAINST T HE CASH RECEIVED FROM THEM. FOR PROVIDING SUCH SERVICES RS .100 PER LAKH IS CHARGED AS A COMMISSION AND IN CASE THE AMOUNT IS LESS THAN RS.20,000/-, THEN MINIMUM RS.20 /- IS CHARGED. IT WAS ALSO NOTICED THAT FOR VARIOUS Y EARS DETAILS WERE MAINTAINED IN COMPUTER ON EXCEL SHEET ABOUT THE CASH RECEIVED FROM THE MEMBERS OF THE SOCIETY A ND CHEQUES ISSUED TO VARIOUS SUPPLIERS. STATEMENT OF THE ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 5 PRESDENT MR. MANISH KOTHARI WAS ALSO TAKEN DURING T HE SURVEY PROCEEDINGS. IT WAS OBSERVED BY THE SURVEY TEAM THAT SHRI MANISH KOTHARI IS THE PERSON WHO IS INCHA RGE OF ALL THESE TRANSACTIONS OF CASH DEPOSITS AND CHEQUE ISSUED AND OTHER OFFICE BEARERS OF SOCIETY WORK UNDER HIS DIRECTIONS. INFORMATION ABOUT THE SOURCE OF CASH W AS ASKED TO WHICH THE REPLY WAS FURNISHED. THIS OBSER VATION OF THE SURVEY TEAM WAS REASON TO BELIEVE FOR THE RE VENUE AUTHORITIES TO ASSESS/REASSESS THE ESCAPED INCOME FOR VARIOUS ASSESSMENT YEAR 2008-09 TO 2015-16. 6. ACCORDINGLY NOTICE U/S 148 OF THE ACT WAS ISSUED ON 27.3.20215 WHICH WAS DULY SERVED BY AFFIXTURE ON 31.3.2015. NO SUBMISSIONS WERE MADE IN RPELY TO TH E NOTICE U/S 148 OF THE ACT. THEREAFTER NOTICE U/S 1 42(1) OF THE ACT WAS ISSUED TO SHRI R.L.NAGAR WHO IS LIQUIDA TOR OF THE SOCIETY. THIS NOTICE U/S 142(1)OF THE ACT WAS S ERVED ON 30.9.2015. LIQUIDATOR/ OFFICIAL REPRESENTATIVE A TTENDED THE PROCEEDINGS AND FILED REPLIES WHEREIN IT WAS AG AIN REITERATED THAT THE ALLEGED CASH DEPOSITED IN VARIO US BANK ACCOUNTS OF THE SOCIETY DURING THE ASSESSMENT YEAR 2008- ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 6 09 TO 2014-15 ARE NOT IN THE NATURE OF INCOME BUT T HEY ARE THE AMOUNT RECEIVED FROM THE MEMBERS OF THE SOC IETY TO BE DEPOSITED IN BANK AND CHEQUES/DD TO BE ISSUED TO THE VENDORS RELATED TO THE PARTICULAR MEMBER AND FO R THIS SERVICE SOCIETY CHARGED COMMISSION OF RS.100 PER LA KH AND MIMIMUM OF RS.20/- FOR AMOUNT LESS THAN RS.20,000/-. HOWEVER THE LD. A.O NOTICED THAT APAR T FROM FEW OF THE PARTIES WHO ACCEPTED TO HAVE GIVEN CASH TO THE SOCIETY FOR ISSUING CHEQUE/DD MAJORITY OF TH E PERSONS NAMED IN THE EXCEL SHEETY REFUSED TO HAVE G IVEN ANY CASH ENTERED INTO SUCH TRANSACTION. BASED ON T HIS OBSERVATION IT WAS ASSUMED THAT THE UNACCOUNTED CAS H HAS BEEN DEPOSITED IN THE BANK ACCOUNT OF THE SOCIE TY ON THE DIRECTION OF SHRI MANISH KOTHARI. ACCORDINGLY PROTECTIVE ADDITION WAS MADE IN THE HANDS OF THE SO CIETY AND SUBSTANTIVE ADDITION WAS MADE IN THE HANDS OF MANISH KOTHARI (PRESIDENT OF THE SOCIETY) FOR THE UNEXPLAINED INVESTMENT U/S 69 OF THE ACT. AGAINST THESE ADDITIONS ASSESSEE SOCIETY PREFERRED APPEAL BEFORE LD. CIT(A) AND SUCCEEDED, AS LD. CIT(A) WAS OF THE VIEW THAT ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 7 AS THE SUBSTANTIVE ADDITIONS ARE CONFIRMED IN THE H ANDS OF SHRI MANISH KOTHARI THEREFORE THE PROTECTIVE ADD ITION MADE IN THE HANDS OF THE SOCIETY DESERVES TO BE DEL ETED. 7. THOUGH THE PROTECTIVE ADDITION WAS MADE IN THE HANDS OF THE SOCIETY FOR ASSESSMENT YEAR 2008-09 TO 2011-12 BUT REVENUE HAS CHALLENGED THE FINDING OF L D. CIT(A) DELETING THE PROTECTIVE ADDITION ONLY FOR AS SESSMENT YEAR 2008-09 TO 2011-12 RAISING COMMON GROUND OF APPEAL CHALLENGING THE ACTION OF LD. CIT(A) DELETIN G THE ADDITION FOR UNEXPLAINED INVESTMENT U/S 69 OF THE A CT MADE BY THE LD. A.O FOR THE UNEXPLAINED CASH DEPOS ITED IN THE BANK ACCOUNT OF THE SOCIETY. 8. THE SUMMARIZED GROUNDS OF APPEALS READS AS FOLLOWS:- (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDIT ION OF RS.9,23,93,288/-, RS.13,90,35,137/-, RS.17,69,03,9 22/- AND RS.26,21,59,360/- FOR ASSESSMENT YEARS 2008-09 TO 2011-12 RESPECTIVELY ON ACCOUNT OF UNEXPLAINED INVESTMENT U/S 69 OF THE INCOME TAX ACT. (II) THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTE R, MODIFY, DELETE AND OR WITHDRAW ANY/ALL OF THE ABOVE GROUNDS OF AP PEAL ON OR BEFORE THE FINAL DATE OF HEARING ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 8 9. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUE D AND SUPPORTED THE ORDER OF LD. A.O FOR THE ASSESSME NT YEARS IN APPEAL BEFORE US BUT COULD NOT SREPLY TO T HE QUESTION THAT WHY THE REVENUE HAS NOT CHALLENGED TH E ORDER OF LD. CIT(A) DELETING THE ADDITION MADE U/S 69 OF THE ACT FOR REMAINING ASSESSMENT YEARS 2012-13 TO 2 015- 16. LD. DR ALSO COULD NOT CONTROVERT THE FACT THAT IN SOME OF THE ASSESSMENTS FRAMED BY LD. A.O IN THE CASE OF MANISH KOTHARI ADDITIONS WERE MADE BY ESTIMATING TH E BROKERAGE INCOME COMPUTED @0.1% (RS.100 PER LAKH) F OR THE TRANSACTION OF CASH DEPOSITED AND CHEQUES ISSUE D ON BEHALF OF THE MEMBERS OF THE SOCIETY/OTHER PERSONS WHO ADMITTED TO HAVE TAKEN THE SERVICE OF THE SOCIETY B Y WAY OF GIVING CASH AND GETTING CHEQUES ISSUES IN NAMEOF OT HER PARTIES/SUPPLIER. 10. PER CONTRA LD. SR. COUNSEL FOR THE ASSESSEE AS WELL AS OTHER ASSESSEE NAMELY SHRI MANISH KOTHARI SUBMITTED THAT THE MODUS OPERANDI OF DEPOSITING CASH IN BANK ACCOUNTS OF SOCIETY ASSESSEE AND CORRESPONDING AMOU NT FOR ISSUE OF CHEQUE/DD STANDS CLEAR FROM THE VERY ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 9 MOMENT WHEN THE STATEMENTS OF THE OFFICE BEARERS WE RE RECORDED AND THE COMPUTRISED EXCEL SHEETS WERE SEIZ ED DURING THE COURSE OF SURVEY U/S 133A OF THE ACT. M R. NITIN SAINI WHO IS ALSO THE CO-SIGNATORY FOR ISSUAN CE OF CHEQUES HAS STATED THAT CASH WAS RECEIVED FROM DIFF ERENT BUSINESSMEN OF WHICH SOME OF THEM WERE MEMBERS OF T HE SOCIETY ALSO AND ON THE VERY SAME DAY OR WITHIN TWO TO THREE DAYS ISSUED ACCOUNT PAYEE CHEQUES/ACCOUNT PAY EE DRAFT TO VARIOUS PERSONS AS PER THE DIRECTION OF TH E MEMBERS WHO COMMUNICATED THROUGH THE PRESIDENT MR. MANISH KOTHARI. FOR PROVIDING THIS FACILITY, SERVIC E CHARGE OF RS.100 PER LAKH WAS COLLECTED AND THE SAME CAN B E ADDED AS INCOME IN THE HANDS OF THE SOCIETY AS SERV ICE CHARGES BUT BY NO CANON COULD THE ADDITION FOR UNEXPLAINED INVESTMENT U/S 69 OF THE ACT BE MADE FO R THE TOTAL AMOUNT OF CASH DEPOSITED IN THE BANK AS THE S AME WILL BE TOTALLY ILLOGICAL SINCE THERE IS A CORRESPO NDING AMOUNT PAID THROUGH BANKING CHANNEL TO VARIOUS PERS ONS INCLUDING PRIVATE LIMITED COMPANIES. HE WAS FAIR E NOUGH TO ACCEPT THAT IN VIEW OF THE SETTLED JUDICIAL PREC EDENCE ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 10 THE SOCIETY BEING A SEPARATE LEGAL ENTITY HAVING IT S BYE- LAWS, PAN, BANK ACCOUNTS, THE INCOME ELEMENT IN THE ALLEGED TRANSACTION MAY BE ADDED IN THE HANDS OF SO CIETY. FURTHER HE SUBMITTED THAT AT THE MOST ONLY THE COMMULATIVE PEAK BALANCE IN ALL BANK ACCOUNTS FOR T HE YEAR COULD HAVE BEEN ADDED IF THEY EXCEED THE SERVI CE CHARGES OF RS.100/- PER LAKH. LD. SR. COUNSEL FOR THE ASSESSEE REQUESTED THAT NECESSARY DIRECTION MAY BE GIVEN TO LD. A.O TO COMPUTE THE COMMISSION @RS.100 PER LA KH ON THE ALLEGED TRANSACTION OF CASH DEPOSITED/CHEQUE ISSUED AND THE ADDITION IF ANY REQUIRED TO BE MADE, SHOULD BE THE CUMULATIVE PEAK BALANCE IN ALL THE B ANK ACCOUNTS OF THE SOCIETY DURING THE YEAR OR THE COMMISSION AMOUNT CALCULATED @0.1% OF TOTAL CASH DEPOSITED IN BANK ACCOUNTS DURING THE YEAR, WHICHE VER IS HIGHER. IT WAS ALSO SUBMITTED THAT THE IMPUGNED AD DITION CANNOT STAND IN THE EYES OF LAW SINCE THERE IS NO O THER SOURCE OF INCOME FROM BUSINESS OR OTHERWISE TO HAVE BEEN EARNED BY THE SOCIETY UNEARTHED BY THE REVENUE AUTHORITIES DURING SURVEY OR POST SURVEY WHICH THUS ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 11 MAKES THE IMPUGNED ADDITION OF TOTAL CASH DEPOSIT I N BANK ACCOUNT COMPLETELY ILLOGICAL. RELIANCE PLACED ON THE FOLLOWING DECISIONS:- (I) CIT V/S SMT. P.K. NOORJAHAN (1999) 237 ITR 57 0/103 TAXMAN 382 (APEX COURT). (II) S. VENKAT REDDY V/S ITO (2016) 76 TAXMANN.COM 128 (I.T.A.T. HYDERABAD) (III) AMIT AGRAWAL V/S DCIT (KOLKATA I.T.A.T. ITA NO.337/KO/2014 ORDER DATED 09.09.2016 (IV) BINOD KUMAR JHA V/S ITO (KOLKATA I.T.A.T. ITA NO.577/KO/2013 ORDER DATED 20.11.2015 (V) CIT V/S TIRUPATI CONSTRUCTION CO (2015) 55 TAXMANN.COM 308 (GUJARAT HIGH COURT) 11. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND CAREFULLY GONE THROUGH THE DECISIONS REFERRED BY THE SR. COUNSEL FOR THE ASSES SEE. THE REVENUE HAS CHALLENGED THE FINDING OF LD. CIT(A ) DELETING THE PROTECTIVE ADDITION MADE IN THE HANDS OF THE ASSESSEE SOCIETY AT RS. RS.9,23,93,288/-, RS.13,90,35,137/-, RS.17,69,03,922/- AND RS.26,21,59,360/- FOR ASSESS MENT YEARS 2008-09 TO 2011-12 RESPECTIVELY WHICH WAS MADE BY THE LD. A.O ON ACCOUNT OF UNEXPLAINED INVESTMENT U/S 69 OF THE ACT . NO PLAUSIBLE REASON GIVEN BY THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 12 REVENUE HAVING NOT FILED APPEAL AGAINST THE FINDING OF LD. CIT(A) DELETING SIMILAR TYPE OF PROTECTIVE ADDITIONS FOR A SSESSMENT YEAR 2012-13 TO ASSESSMENT YEAR 2015-16. THE BASIS OF T HE IMPUGNED ADDITION WAS THE FOLLOWING AMOUNT OF TOTAL CASH DEP OSITED IN VARIOUS BANK ACCOUNTS OF THE ASSESSEE SOCIETY :- ASSESSMENT YEAR AMOUNT (RS.) 2008-09 9,25,93,228 2009-10 13,90,35,137 2010-11 17,69,03,922 2011-12 26,21,59,360 12. THE ABOVE DETAILS OF CASH DEPOSITED IN THE BANK ACCOUNT OF THE SOCIETY WERE FOUND DURING THE COURSE OF SURVEY COND UCTED AT THE OFFICE PREMISES OF THE SOCIETY U/S 133A OF THE ACT ON 29.9.2014. AT THE TIME OF INITIATION OF REASSESSMENT PROCEEDINGS BY WAY OF ISSUANCE OF NOTICE U/S 148 OF THE ACT AS WELL AS DU RING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 147 R.W.S. 143(3) OF THE ACT LIQUIDATOR OF THE SOCIETY MR. R.L. NAGAR APPEARED AND GAVE REP LIES. IT WAS SUBMITTED THAT THE ASSESSEE SOCIETY IS NOT RUNNING ANY BUSINESS. ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 13 THE ALLEGED TRANSACTIONS ARE BASICALLY THE CASH REC EIVED FROM THE MEMBERS OF THE SOCIETY AND THE CORRESPONDING ENTRIE S OF ACCOUNT PAYEE CHEQUES/DEMAND DRAFTS ISSUED ARE THE TRANSFER S TO VARIOUS PERSONS ON THE ADVICE/DIRECTION OF THE MEMBERS/PERS ONS (THROUGH THE PRESIDENT OF SOCIETY NAMELY SHRI MANISH KOTHARI ) WHO HAVE GIVEN CASH. FOR PROVIDING THIS FACILITY, SOCIETY US ED TO CHARGE NOMINAL AMOUNT OF RS.100 PER LAKH. THE SOCIETY WOR KED THROUGH ITS OFFICE BEARERS WHO WERE GIVEN THE AUTHORITY TO SIGN THE CHEQUES ON BEHALF OF THE SOCIETY. DAY TO DAY WORKING OF BA NKS WERE CARRIED OUT BY THE MANAGER MR. NITIN SAINI AND THE PRESIDEN T MR. MANISH KOTHARI USED TO COMMUNICATE WITH THE MEMBERS FOR TH E TRANSACTION OF CASH DEPOSITS AND ISSUE OF CHEQUES TO VARIOUS PE RSONS. 13. WE FIND THAT THE ASSESSEE SOCIETY IS A CO-OPERA TIVE SOCIETY REGISTERED UNDER THE PROVISIONS OF SECTION 4 OF MAD HYA PRADESH SWAYATTA SAHAKARITA ADHINIYAM, 1994 WORKING SINCE 1 4.09.2004. THE SOCIETY HAS ITS BYE LAWS IN ORDER TO GOVERN THE REGULATION OF THE SOCIETY . THE SOCIETY HAS THE BANK ACCOUNT IN ITS NAME AND ALSO HAS A SEPARATE PERMANENT ACCOUNT NUMBER. THE SECTION 2( 19) OF THE INCOME TAX ACT DEFINES A CO-OPERATIVE SOCIETY AS A SOCIETY ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 14 REGISTERED UNDER THE CO-OPERATIVE SOCIETIES ACT, 19 12, OR UNDER ANY OTHER LAW FOR THE TIME BEING IN FORCE IN ANY STATE FOR THE REGISTRATION OF CO-OPERATIVE SOCIETIES. 14. THAT THE PROVISION OF MADHYA PRADESH SWAYATTA S AHAKARITA ADHINIYAM, 1999 PROVIDES THE PROCESS OF REGISTRATIO N, ITS INCORPORATION, BYELAWS, ELIGIBILITY OF ITS MEMBER, ADMISSION OF MEMBER AND OTHER PROVISION WHICH ARE NECESSARY FOR ESTABLISHMENT OF A CO-OPERATIVE SOCIETY UNDER ADHINIYAM, 1999 AND THAT THE ADHINIYAM, 1999 ALSO PROVIDES THE PRESIDENT AND VIC E PRESIDENT OF CO-OPERATIVE SOCIETY AND FUNCTION, RESPONSIBILITY A ND POWER OF BOARD. 15. AT THIS JUNCTURE IT IS RELEVANT TO REPRODUCE TH E RELEVANT PROVISIONS OF MADHYA PRADESH SWAYATTA SAHAKARITA ADHINIYAM, 1999 ; SECTION 29. LIABILITY OF MEMBER A CO-OPERATIVE MAY BE REGISTERED WITH LIMITED OR U NLIMITED LIABILITY: PROVIDED TDHAT UNLESS AND STATE GOVERNMENT, BY A G ENERAL OR SPECIAL ORDER OTHERWISE DIRECTS, THE LIABILITY OF A CO-OPERATIVE OF WHICH ANOTHER CO-OPERATIVE IS A MEMBER SHALL BE LI MITED. EXPLANATION: FOR THE PURPOSE OF THIS SUB-SECTION:- ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 15 (A) 'COOPERATIVE WITH LIMITED LIABILITY' MEANS A CO -OPERATIVE IN WHICH THE LIABILITY OF ITS MEMBERS FOR THE DEBTS OF THE C O-OPERATIVE IS LIMITED BY ITS BYE-LAWS, TO SUCH FORM AND EXTENT AS THEY MA Y UNDERTAKE TO CONTRIBUTE TO ANY DEFICIT IN THE ASSETS OF THE CO-O PERATIVE, IN THE EVENT OF ITS BEING WOUND UP; AND (B) 'CO-OPERATIVE WITH UNLIMITED LIABILITY' MEANS A CO-OPERATIVE THE MEMBERS OF WHICH ARE, IN THE EVENT OF ITS BEING WOU ND UP, JOINTLY AND SEVERALLY LIABLE FOR AND IN RESPECT OF ALL ITS OBLI GATIONS, TO CONTRIBUTE TO ANY DEFICIT IN THE ASSETS OF THE CO-OPERATIVE. (2) WHERE A CO-OPERATIVE BY SPECIAL RESOLUTION AMEN DS ITS BYE-LAWS TO CHANGE THE FORM AND EXTENT OF LIABILITY, OF ITS MEM BERS IT SHALL GIVE NOTICE THEREOF TOGETHER WITH A COPY OF THE AMENDMEN T TO ITS MEMBERS AND CREDITORS AND ANY MEMBER OTHER THAN THOSE WHO V OTED IN FAVOUR OF THE PROPOSED CHANGE OF LIABILITY AND ANY CREDITO R SHALL, WITHIN A PERIOD OF THIRTY DAYS FROM THE DATE OF SERVICE OF N OTICE UPON HIM, HAVE THE OPTION OF WITHDRAWING HIS SHARES, DEPOSITS OR L OANS FROM THE CO- OPERATIVE AS THE CASE MAY BE SUBJECT TO THE DISCHAR GE OF HIS OBLIGATIONS TO THE CO-OPERATIVE. (3) MEMBER OR CREDITOR WHO FAILS TO EXERCISE THE OP TION WITHIN THE PERIOD SPECIFIED IN SUB-SECTION (2) SHALL BE DEEMED TO HAVE ASSENTED TO THE CHANGE OF LIABILITY. (4) AN AMENDMENT PASSED UNDER SUB-SECTION (2) SHALL NOT TAKE EFFECT UNTIL- (A) ALL CLAIMS OF THE MEMBERS AND CREDITORS OF THE CO-OPERATIVE WHO HAVE EXERCISED THE OPTION UNDER SUB-SECTION (2) HAV E BEEN MET IN FULL OR OTHERWISE SATISFIED; AND (B) NOTICE OF THE AMENDMENT OF THE BYE-LAWS OF THE CO-OPERATIVE AND INFORMATION OF SETTLEMENT OF CLAIMS OF MEMBERS AND CREDITORS IS SENT TO THE REGISTRAR AND HIS ACKNOWLEDGMENT IS OBTAINED . (5) SUBJECT TO THE PROVISIONS OF SUB-SECTION(6), TH E LIABILITY OF A PAST MEMBER OR OF THE ESTATE OF A DECASED MEMBER OF A CO -OPERATIVE FOR THE DEBTS OF THE CO-OPERATIVE AS THEY STOOD- (A) IN THE CASE OF A PAST MEMBER, ON THE DATE ON WH ICH HE CEASED TO BE A MEMBER; AND ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 16 (B) IN THE CASE OF A DECEASED MEMBER, ON THE DATE O F HIS DEATH; SHALL CONTINUE FOR A PERIOD OF TWO YEARS FROM SUCH DATE. (6) WHERE A CO-OPERATIVE IS ORDERED TO BE DISSOLVED UNDER ANY PROVISION OF THIS ACT, THE LIABILITY OF A PAST MEMB ER OR OF THE ESTATE OF A DECEASED MEMBER, WHO CEASED TO BE A MEMBER OR DIE D DURING THE PERIOD OF TWO YEARS IMMEDIATELY PRECEDING THE DATE OF ORDER FOR DISSOLUTION, SHALL CONTINUE UNTIL COMPLETION OF THE ENTIRE LIQUIDATION PROCEEDINGS, BUT SUCH LIABILITY SHALL BE LIMITED ON LY TO THE DEBTS OF THE CO-OPERATIVE AS THEY STOOD ON THE DATE OF CESSATION OF HIS MEMBERSHIP OR HIS DEATH, AS THE CASE MAY BE. 30. GENERAL BODY . (1) THERE SHALL BE A GENERAL BODY FOR EVERY CO- OPERATIVE CONSISTING OF ALL THE MEMBERS OF SUCH CO- OPERATIVE. (2) WHERE THE GENERAL BODY OF A CO-OPERATIVE DECIDE S THAT THE SIZE, SPREAD OR TYPES OF ITS MEMBERSHIP REQUIRES A REPRES ENTATIVE BODY OF DELEGATES FOR MORE EFFECTIVE DECISION MAKING, ITS B YE-LAWS SHALL PROVIDE FOR A SMALLER BODY CALLED DELEGATE GENERAL BODY ELECTED FROM THE MEMBERS IN THE ANNUAL GENERAL MEETING IN ACCOR DANCE WITH THE BYE-LAWS TO EXERCISE SUCH POWERS AND TO DISCHARGE S UCH DUTIES OF THE GENERAL BODY AS MAY BE SPECIFIED IN THE BYE-LAWS. (3) UNLESS THE CONTEXT OTHERWISE REQUIRES, ANY REFE RENCE IN THIS ACT TO THE GENERAL BODY SHALL APPLY TO THE DELEGATE GENERA L BODY WHERE IT EXISTS. (4) SUBJECT TO THE PROVISIONS OF THIS ACT AND THE B YE-LAWS, THE ULTIMATE POWER OF A CO-OPERATIVE SHALL VEST IN THE GENERAL B ODY. (5) ANY POWER, FUNCTION OR RESPONSIBILITY, FALLING WITHIN THE SCOPE OF A CO-OPERATIVE AS A CORPORATE BODY, WHICH HAS NOT BEE N SPECIFICALLY ENTRUSTED BY THIS ACT OR THE BYE-LAWS, TO ANY AUTHO RITY OF THE CO- OPERATIVE, AMY BE DEALT WITH BY THE GENERAL BODY, O N A REFERENCE BY THE BOARD. 31. FUNCTIONS, RESPONSIBILITIES AND POWERS OF GENER AL BODY. (1) THE FOLLOWING MATTERS, AMONG SUCH OFFICER MATTE RS AS ARE CONSIDERED NECESSARY BY THE BOARD, SHALL BE DEALT W ITH BY THE GENERAL BODY AT ITS ANNUAL GENERAL MEETING, NAMELY: - (A) ELECTION, IF FALLEN DUE, OF THE DIRECTORS OR D ELEGATES; ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 17 EXPLANATION : ELECTION OF THE DIRECTORS OR DELEGATES SHALL BE DEE MED TO HAVE FALLEN DUE, IF THE TERMOF SUCH BOARD OR DEL EGATE GENERAL BODY COMES TO AN END WITHIN A PERIOD OF THREE MONTHS FRO M THE DATE OF THE ANNUAL GENERAL MEETING. (B) CONSIDERATION OF THE LONG TERM PLAN AND BUDGET, WHEN REQUIRED; (C) CONSIDERATION OF THE ANNUAL OPERATIONAL PLAN AN D BUDGET FOR THE CURRENT FINANCIAL YEAR; (D) CONSIDERATION OF THE ANNUAL REPORT OF ACTIVITIE S FOR THE PREVIOUS FINANCIAL YEAR; (E) CONSIDERATION OF AUDITED FINANCIAL STATEMENTS O F ACCOUNTS, THE AUDITORS REPORT RELATING TO THE PREVIOUS FINANCIAL YEAR AND COMPLIANCE REPORT ALONG WITH THE ACTION TAKEN ON IT ; (F) CONSIDERATION OF THE REPORT ON DEVIATIONS, IF ANY, FROM THE APPROVED BUDGET RELATING TO THE PREVIOUS FINANCIAL YEAR; (G) DISPOSAL OF SURPLUS, IF ANY, OF PREVIOUS FINANC IAL YEAR; (H) MANAGEMENT OF DEFICIT, IF ANY, OF PREVIOUS FINA NCIAL YEAR; (I) CREATION OF SPECIFIC RESERVES AND OTHER FUNDS; (J) REVIEW OF ACTUAL UTILISATION OF RESERVES AND OT HER FUNDS; (K) REVIEW OF THE REPORT ON THE ATTENDANCE AT MEETI NGS BY DIRECTORS; (L) REVIEW OF THE USE OF THE CO-OPERATIVE'S SERVICE S BY THE DIRECTORS; (M) REVIEW OF REMUNERATION PAID TO ANY DIRECTOR OR MEMBER OF ANY COMMITTEE OR INTERNAL AUDITOR IN CONNECTION WITH HI S DUTIES IN THAT CAPACITY OR HIS ATTENDANCE AT CONCERNED MEETINGS; (N) REVIEW OF QUANTUM AND PERCENTAGE OF SERVICES PR OVIDED TO NON- MEMBERS VIS-A-VIS SERVICES PROVIDED TO THE MEMBERS; (O) REPORT OF ACTIVITIES AND ACCOUNTS RELATED TO ME MBER EDUCATION AND DIRECTOR AND STAFF TRAINING; (P) CONSIDERATION OF ANY OTHER MATTER WHICH MAY BE BROUGHT BEFORE THE MEETING OF THE GENERAL BODY IN ACCORDANCE WITH THE BYE-LAWS. ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 18 (2) THE FOLLOWING MATTERS, AMONG SUCH OTHER MATTERS AS CONSIDERED NECESSARY BY THE BOARD, OR WHICH ARE SPECIFICALLY A SSIGNED TO THE GENERAL BODY UNDER ANY OTHER PROVISION OF THIS ACT, MAY BE DEALT WITH BY THE GENERAL BODY AT ITS ANNUAL OR GENERAL MEETIN G, NAMELY:- (A) AMENDMENTS OF BYE-LAWS; (B) REMOVAL OF DIRECTORS; (C) MEMBERSHIP OF THE CO-OPERATIVE IN [ PRINCIPAL C O-OPERATIVE]:- (D) PARTNERSHIP WITH OTHER CO-OPERATIVES; (E) AMALGAMATION, DIVISION, MERGER, TRANSFER OF ASS ETS AND LIABILITIES; (F) DISSOLUTION OF THE CO-OPERATIVE; (G) CONSIDERATION OF THE REGISTRAR'S REPORT OF INQU IRY OR REASONS FOR THE NON-COMPLETION OF THE INQUIRY. (3) IF THE BYE-LAWS OF A CO-OPERATIVE PROVIDE FOR E LECTION OF ALL OR MORE DIRECTORS ON TERRITORIAL BASIS, SUCH DIRECTOR SHALL BE ELECTED FROM THE AREAS, IN A MEETING OF THE MEMBERS OF THAT AREA IN ACCORDANCE WITH THE PROVISIONS OF THE BYE-LAWS ON A DATE PRIOR TO T HAT OF ANNUAL GENERAL MEETING. THE RESULT THEREOF SHALL BE AFFIX ED ON THE NOTICE BOARD OF THE HEAD OFFICE OF THE COOPERATIVE AND ALS O AT THE PLACE OF THE ANNUAL GENERAL MEETING PRIOR TO THE COMMENCEMEN T OF THE PROCEEDINGS OF THE ANNUAL GENERAL MEETING. 34. PRESIDENT AND VICE-PRESIDENT OF CO-OPERATIVE . (1) THERE SHALL BE A PRESIDENT AND A VICE PRESIDENT IN A CO-OPERATIVE TO BE ELECTED BY THE BOARD FROM AMONGST ITS DIRECTO RS IN ACCORDANCEWITH THE PROVISIONS OF THE BYE-LAWS. THE TERM OF PRESIDENT AND VICE PRESIDENT ELECTED BY THE BOARD SHALL BE CO TERMINOUS WITH THE TERM OF THE BOARD. THE BOARD SHALL AT THE TIME OF ELECTION OF PRESIDENT AND VICE PRESIDENT ALSO ELECT REPRESENTAT IVE WHO SHALL REPRESENT IT IN OTHER CO-OPERATIVE AND THE REPRESEN TATIVE SO ELECTED SHALL NOT BE WITHDRAWN BY THE BOARD TILL THE NEXT E LECTIONS OF THE BOARD. (2) ANY CASUAL VACANCY IN THE OFFICE OF THE PRESIDE NT OR VICE PRESIDENT OR REPRESENTATIVE SHALL BE FILLED IN BY THE BOARD I N ACCORDANCE WITH THE PROVISIONS OF THE BYE-LAWS AND THE PRESIDENT OR VICE PRESIDENT OR ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 19 REPRESENTATIVE SO ELECTED SHALL HOLD OFFICE FOR THE UNEXPLAINED TERM OF HIS PREDECESSOR. (3) THE VICE PRESIDENT MAY RESIGN HIS OFFICE AT ANY TIME BY NOTICE IN WRITING TO THE PRESIDENT AND THE PRESIDENT MAY RESI GN HIS OFFICE AT ANY TIME BY NOTICE IN WRITING TO THE VICE PRESIDENT . (4) THE BOARD MAY BY A RESOLUTION PASSED BY THREE-F OURTH MAJORITY OF THE DIRECTORS PRESENT AND VOTING AT A MEETING HELD FOR THE PURPOSE, REMOVE THE PRESIDENT OR VICE PRESIDENT ON ANY OF TH E GROUNDS MENTIONED IN SUB-SECTION (1) OF SECTION 24. SUCH M EETING SHALL NOT BE PRESIDED BY THE PRESIDENT OR VICE PRESIDENT AGAINST WHOM SUCH RESOLUTION IS TO BE CONSIDERED. (5) THE PRESIDENT OR VICE PRESIDENT AS THE CASE MAY BE, AGGRIEVED BY THE RESOLUTION PASSED UNDER SUB-SECTION (4) MAY APP EAL TO THE ARBITRATION COUNCIL WITHIN THIRTY DAYS FROM THE DAT E OF PASSING OF SUCH RESOLUTION WHOSE DECISION THEREON SHALL BE FIN AL. (6) IN THE EVENT OF THE OCCURRENCE OF ANY VACANCY I N THE OFFICE OF THE PRESIDENT BY REASON OFHIS DEATH, RESIGNATION OR REM OVAL, OR OTHERWISE, THE VICE PRESIDENT SHALL ACT AS PRESIDEN T UNTIL THE DATE ON WHICH A NEW PRESIDENT ELECTED IN ACCOREDANCE WITH T HE PROVISIONS OF TYHIS ACT AND THE BYE-LAWS TO FILL SUCH VACANCY. (7) WHEN THE PRESIDENT IS UNABLE TO DISCHARGE HIS F UNCTIONS OWING TO ABSENCE, ILLNESS, OR ANY OTHER CAUSE, THE VICE PRES IDENT SHALL DISCHARGE THE FUNCTIONS OF THE PRESIDENT UNTIL THE DATE ON WHICH THE PRESIDENT RESUMES HIS DUTIES. (8) THE VICE PRESIDENT SHALL DURING AND IN RESPECT OF THE PERIOD WHILE HE IS SO ACTING AS OR DISCHARGING THE FUNCTIONS OF PRESIDENT HAVE ALL THE POWERS OF THE PRESIDENT. 35. FUNCTIONS, RESPONSIBILITIES ANTI POWERS OF BOAR D. BOARD SHALL DISCHARGE SUCH FUNCTIONS, PERFORM SUCH DUTIES AND RESPONSIBILITIES AND EXERCISE SUCH POWERS AS MAY BE SPECIFIED IN THE BYE-LAWS AND IN ACCORDANCE WITH THE TERMS, CONDITIO NS AND PROCEDURE LAID DOWN THEREIN AND IN PARTICULAR THE B OARD SHALL HAVE THE FOLLOWING POWERS, FUNCTIONS AND DUTIES NAMELY:- ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 20 A) TO INTERPRET THE ORGANISATIONAL OBJECTIVES, TO SET UP SPECIFIC GOALS TO BE ACHIEVED TOWARDS SUCH OBJECTIVES, AND TO MAKE PE RIODIC APPRAISAL OF OPERATIONS; B) TO NOMINATE, ELECT OR APPOINT AND REMOVE THE CHIEF EXECUTIVE; C) TO MAKE PROVISIONS FOR THE MATTERS MENTIONED IN SE CTION 44 IN RESPECT OF THE STAFF OF A CO-OPERATIVE; D) TO FINALISE LONG-TERM PERSPECTIVE PLAN, ANNUAL PLA N AND BUDGET, AND TO DIRECT THE AFFAIRS OF THE CO-OPERATIVE IN AC CORDANCE WITH THE PLAN AND BUDGET APPROVED BY THE GENERAL BODY; E) TO ARRANGE FOR FUNDS; F) TO AUTHORISE ACQUISITION AND DISPOSAL OF IMMOVABLE PROPERTY; G) TO FRAME, APPROVE AND AMEND REGULATIONS RELATING TO SERVICES, FUNDS, ACCOUNTS AND ACCOUNTABILITY, AND INFORMATION AND REPORTING SYSTEMS; H) TO ELECT PRESIDENT, VICE-PRESIDENT AND REPRESENTATI VE IN ACCORDANCE WITH THE PROVISIONS OF THE BYE-LAWS; I) TO PREPARE THE ANNUAL FINANCIAL STATEMENT OF ACCOUN TS; J) TO FILE RETURNS AND INFORMATION IN ACCORDANCE WITH THE PROVISIONS OF SUB-SECTIONS (1) AND (2) OF SECTION 52; K) TO CONVENE ANNUAL GENERAL MEETING OR SPECIAL GENER AL MEETING UNDER. SECTION 32; L) TO PREPARE THE BUSINESS POLICY FOR CO-OPERATIVE AND TO CONDUCT THE WORK IN ACCORDANCE WITH THE BUSINESS POLICY; M) TO CONSIDER THE AUDIT REPORT OF ACCOUNTS OF THE PR EVIOUS FINANCIAL YEAR AND TO TAKE ACTION ON ITS RECOMMENDATIONS AND TO SUBMIT THE COMPLIANCE REPORT ALONG WITH THE DETAILS OF ACTION TAKEN BEFORE THE ANNUAL GENERAL MEETING. 16. AS SUBMITTED BY SR. COUNSEL FOR THE ASSESSEE T HAT RULE 41 & 42 OF BYE LAWS OF THE ASSESSEE SOCIETY PROVIDES FOR THE POWERS AND DUTIES ROLE OF PRESIDENT AND MANAGER. FROM PERUSAU L OF THE SAME WE FIND THAT THE NOMINATION OF PRESIDENT AND VICE P RESIDENT IS ONLY FOR FUNCTIONING OF THE SOCITY BUT THE MAIN POWERS A RE VESTED WITH BOARD OF SOCIETIES. SECTION 35 OF THE M.P. SWAYATT A SAHAKARITA ADHINIYAM , 1994 PROVIDES THE POWER AND FUNCTIONS O F THE BOARD OF ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 21 SOCIETY TO NOMINATE THE PRESIDENT AS WELL AS TO REM OVE HIM FROM THE POST. WE THUS ARE OF THE CONFIRMED OPINION THAT TH E ASSESSEE SOCIETY IS A SEPARATE ENTITY FROM ITS MEMBERS AND FROM ITS PRESIDENT. FOR THE PURPOSE OF INCOME TAX ALSO THE S OCIETY IS A SEPARATE LEGAL ENTITY DIFFERENT FROM ITS MEMBERS AND OFFICE BEARERS. UNDER THE INCOME TAX ACT THE CO-OPERATIVE SOCIETY IS ASSESSED IN THE STATUS OF ASSOCIATION OF PERSONS. 17. WE FURTHER OBSERVE THAT THE ALLEGED CASH DEPOSI TS ARE IN THE BANK ACCOUNTS WHICH ARE UNDISPUTEDLY IN THE NAME OF SOCIETY AND THE FACTS REMAIN THAT ALL THE ALLEGED TRANSACTIONS OF THE CASH DEPOSIT AND CORRESPONDING ENTRIES AND CHEQUE ISSUED ARE THR OUGH THESE BANK ACCOUNTS HELD IN THE NAME OF THE ASSESSEE SOCI ETY. SO ADDITION, IF ANY WHICH CAN BE MADE ON ACCOUNT OF TH E ALLEGED TRANSACTIONS OF CASH DEPOSITS IN BANK ACCOUNTS CAN ONLY BE IN THE HANDS OF THE ASSESSEE SOCIETY AND NOT IN HANDS OF A NY OTHER PERON. IT IS A SETTLED LAW THAT THE INCOME TAX DEPARTMENT MUST TAX THE RIGHT PERSON AND THE RIGHT PERSON ALONE AND THE RIG HT PERSONS MEANS THE PERSON WHO IS LIABLE TO BE TAXED ACCORDIN G TO LAW WITH RESPECT TO A PARTICULAR INCOME. THE ASSESSEE SOCIE TY IS A CO- OPERATIVE SOCIETY AND SEPARATE LEGAL NTITY AND THE CASH WAS DEPSITED ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 22 IN ITS BANK ACCOUNT. THE HIDDEN INCOME IN THE ALLE GED TRANSACTIONS IF TO BE TAXED SHOULD BE TAXED IN THE HANDS OF ASSE SSEE SOCIETY ONLY. 18. HON'BLE APEX COURT IN THE CASE OF ITO V/S CH. A TCHAIAH (1996) 218 ITR 239/84 TAXMAN 630 HELD THAT :- UNDER THE 1961 ACT, THE ASSESSING OFFICER HAS NO OP TION LIKE THE ONE HE HAD UNDER THE 1922 ACT. HE CAN, AND HE MUST, TAX TH E RIGHT PERSON AND THE RIGHT PERSON ALONE. BY 'RIGHT PERSON' IS MEANT THE PERSON WHO IS LIABLE TO BE TAXED, ACCORDING TO LAW, WITH RESPECT TO A PARTICUL AR INCOME. THE EXPRESSION 'WRONG PERSON' IS OBVIOUSLY USED AS THE OPPOSITE OF THE EXPRESSION 'RIGHT PERSON'. MERELY BECAUSE A WRONG P ERSON IS TAXED WITH RESPECT TO A PARTICULAR INCOME, THE ASSESSING OFFIC ER IS NOT PRECLUDED FROM TAXING THE RIGHT PERSON WITH RESPECT TO THAT INCOME . THIS IS SO IRRESPECTIVE OF THE FACT AS TO WHICH COURSE IS MORE BENEFICIAL T O THE REVENUE. THE LANGUAGE OF THE RELEVANT PROVISIONS OF THE 1961 ACT IS QUITE CLEAR AND UNAMBIGUOUS. SECTION 183 SHOWS THAT WHERE THE PARLI AMENT INTENDED TO PROVIDE AN OPTION, IT PROVIDED SO EXPRESSLY. WHERE A PERSON IS TAXED WRONGFULLY, HE IS NO DOUBT, ENTITLED TO BE RELIEVED OF IT IN ACCORDANCE WITH LAW, BUT THAT IS A DIFFERENT MATTER ALTOGETHER. THE PERSON LAWFULLY LIABLE TO BE TAXED CAN CLAIM NO IMMUNITY BECAUSE THE ASSESSIN G OFFICER (ITO) HAS TAXED THE SAID INCOME IN THE HANDS OF ANOTHER PERSO N CONTRARY TO LAW. A COMPARISON OF THE PROVISIONS OF THE 1922 ACT AND THE 1961 ACT IMMEDIATELY BRINGS OUT THE DIFFERENCE BETWEEN THEM. SECTION 3 OF THE 1922 ACT PROVIDED THAT IN RESPECT OF THE TOTAL INCOME OF A FIRM OR AN AOP THE INCOME-TAX WOULD BE CHARGED EITHER ON THE FIRM OR T HE AOP OR ON THE PARTNERS OF THE FIRM OR ON THE MEMBERS OF THE AOP I NDIVIDUALLY. THIS OPTION WAS TO BE EXERCISED BY HIM KEEPING IN VIEW OF THE I NTEREST OF THE REVENUE. WHICHEVER COURSE WAS MORE ADVANTAGEOUS TO THE REVEN UE, HE WAS ENTITLED ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 23 TO FOLLOW IT. IN SUCH A SITUATION, IT WAS GENERALLY HELD THAT ONCE THE ITO OPTED FOR ONE COURSE, THE OTHER COURSE WAS BARRED T O HIM. BUT NO SUCH OPTION IS PROVIDED TO HIM UNDER THE 1961 ACT. SECTI ON 4 SAYS THAT INCOME- TAX SHALL BE CHARGED ON THE TOTAL INCOME 'OF EVERY PERSON' AND THE EXPRESSION 'PERSON' IS DEFINED IN CLAUSE (31) OF SE CTION 2. THE DEFINITION MERELY SAYS THAT THE EXPRESSION 'PERSON' INCLUDES, INTER ALIA, A FIRM AND AN AOP OR A BODY OF INDIVIDUALS WHETHER INCORPORATED O R NOT. THERE ARE NO WORDS IN THE 1961 ACT WHICH EMPOWER THE ASSESSING O FFICER TO GIVE HIM AN OPTION TO TAX EITHER THE AOP OR ITS MEMBERS INDIVID UALLY OR FOR THAT MATTER TO TAX THE FIRM OR ITS PARTNERS INDIVIDUALLY. IF IT IS THE INCOME OF THE AOP IN LAW, THE AOP ALONE HAS TO BE TAXED; THE MEMBERS OF THE AOP CANNOT BE TAXED INDIVIDUALLY IN RESPECT OF THE INCOME OF THE AOP . CONSIDERATION OF THE INTEREST OF REVENUE HAS NO PLACE IN THIS SCHEME. WH EN SECTION 4(1) SPEAKS OF LEVY OF INCOME TAX ON THE TOTAL INCOME OF EVERY PERSON, IT NECESSARILY MEANS THE PERSON WHO IS LIABLE TO PAY INCOME-TAX IN RESPECT OF THAT TOTAL INCOME ACCORDING TO LAW. THE TAX HAS TO BE LEVIED O N THAT PERSON, WHETHER AN INDIVIDUAL, HUF, COMPANY, FIRM, AOP, BOI, A LOCA L AUTHORITY OR AN ARTIFICIAL JURIDICAL PERSON. FROM THIS, IT FOLLOWS THAT IF INCOME OF B IS TAXED IN THE HANDS OF A, A MAY BE LEGITIMATELY AGGRIEVED BUT THAT DOES NOT MEAN THAT B IS EXONERATED OF HIS LIABILITY ON THAT ACCOU NT. B CANNOT SAY, WHEN HE IS SOUGHT TO BE TAXED IN RESPECT OF THE TOTAL INCOM E WHICH IS LAWFULLY TAXABLE IN HIS HANDS, THAT SINCE THE ASSESSING OFFI CER HAS TAXED THE VERY SAME INCOME IN THE HANDS OF A, HE HIMSELF CANNOT BE TAXED WITH RESPECT TO THE SAID TOTAL INCOME. THIS IS NOT ONLY LOGICAL BUT IS CONSISTENT WITH THE PROVISIONS OF THE ACT. WHERE THE PARLIAMENT WANTED TO PROVIDE AN OPTION, A DISCRETION, TO THE ITO, IT HAS PROVIDED SO EXPRESSL Y. SECTION 183 PROVIDES THAT IN THE CASE OF AN UNREGISTERED FIRM, IT IS OPE N TO THE ITO TO TREAT IT, AND MAKE AN ASSESSMENT ON IT, AS IF IT WERE A REGISTERE D FIRM, IF SUCH A COURSE WAS MORE BENEFICIAL TO THE REVENUE - IN THE SENSE T HAT SUCH A COURSE WOULD FETCH MORE TAX TO THE PUBLIC EXCHEQUER. ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 24 SECTION 183 CORRESPONDS TO SECTION 23(5)(B ) OF THE 1922 ACT. THE 1922 ACT NOT ONLY PROVIDED AN OPTION TO THE ASSESSING OFFICE R IN THE MATTER OF A FIRM AND AN AOP UNDER SECTION 3 BUT ALSO EXPRESSLY ENABL ED HIM TO ASSESS AN UNREGISTERED FIRM AS A REGISTERED FIRM, IF, BY DOIN G SO, MORE TAX ACCRUED TO THE STATE. THE 1961 ACT HAS OMITTED THE FIRST OPTIO N, WHILE RETAINING THE SECOND. 19. HON'BLE APEX COURT REFERRED TO ABOVE STATED JUD GMENT SUBSEQUENTLY IN THE CASE OF MANEKLAL AGRAWAL V DCIT (2017) 84 TAXMANN.COM 116(SC) HELD THAT :- GOING BY THE NATURE OF TRANSACTION, A CLEAR FINDING OF FACT IS ARRIVED AT BY THE AUTHORITIES BELOW THAT A DEVISE WAS MADE BY THE APPELLANT HEREIN TO SHOW LESSER INCOME AT HIS HAND AND BECAUSE OF THIS REASON ONLY HE PURPORTEDLY ENTERED INTO A LEASE AGREEMENT WITH HIS WIFE, SON AND DAUGHTER-IN-LAW IN RESPECT OF THE AFORESAID PROPERT Y OF WHICH HE IS PAYING BY LETTING THEM AT A VERY NOMINAL RATES AND ALLOWIN G HIS FAMILY MEMBERS TO SUB-LET THE SAME AT A MUCH HIGHER RENTS. IN THES E CIRCUMSTANCES, THESE FINDINGS OF FACT CANNOT BE INTERFERED WITH IN THE P RESENT APPEALS. IT HAS BEEN HELD BY THIS COURT IN ITO V CH. ATCHAIAH [1996 ] 218 ITR 239/84 TAXMAN 630, THAT THE ASSESSING AUTHORITY HAS A RIGH T TO TAX THE 'RIGHT PERSON'. ONCE IT IS FOUND THAT THE INCOME IN FACT B ELONGS TO THE APPELLANT HE WAS THE RIGHT PERSON FOR TAXING THE SAID INCOME, IT WAS PERMISSIBLE FOR THE INCOME TAX AUTHORITIES TO TAX THE SAID INCOME AT TH E HANDS OF THE ASSESSEE. 20. SIMILAR VIEW WAS TAKEN IN THE CASE OF M.V. VALLIAPPAN V. CIT [1988] 170 ITR 238/37 TAXMAN 46 ( MAD), ASSTT. ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 25 CIT V. JANAK P. [2003] 86 ITD 15 (AHD.), ITO V. K. VENKATESH DUTT [2004] 87 TTJ (BANG.), CIT V. SRIRAM JAGANNATH [2001] 250 ITR 689/119 TAXMAN 581 (RAJ.). 21. WE THEREFORE IN THE LIGHT OF ABOVE JUDGMENTS AN D IN THE GIVEN FACTS OF THE CASE ARE OF THE VIEW THAT THE ELEMENT OF INCOME, IF ANY EMBEDDED IN THE ALLEGED TRANSACTIONS OF CASH DEPOSI TED AND CHEQUE ISSUED TO VARIOUS CONCERNS CONSISTENTLY/CORRESPONDI NGLY FROM THE BANK ACCOUNTS HELD IN THE NAME OF THE REGISTERED CO -OPERATIVE SOCIETY HAVING ITS PERMANENT ACCOUNT NUMBER AND OPE RATING UNDER THE REGISTERED BYE-LAWS, TO BE TAXED UNDER THE PROV ISIONS OF INCOME TAX ACT SHOULD ONLY BE IN THE HANDS OF THE ASSESSEE SOCIETY AND NOT IN THE NAME OF THE OFFICE BEARERS INCLUDING THE PRE SIDENT OF THE SOCIETY SHRI MANISH KOTHARI (WHO IS ALSO ONE OF THE APPELLANT IN THE CAPTIONED APPEAL BEFORE US). 22. AS REGARDS THE QUANTUM OF ADDITION TO BE SUSTAI NED IN THE HANDS OF ASSESSEE SOCIETY, WE FIND THAT IT REMAINS AN UNCONTROVERTED FACT THAT RIGHT FROM THE MOMENT SURV EY WAS CONDUCTED IT WAS STATED AT MULTIPLE OCCASIONS BY TH E PERSONS WHO WERE THE AUTHORIZED SIGNATORY IN THE BANK ACCOUNTS HELD IN THE NAME OF THE SOCIETY THAT THE SOCIETY IS INDULGED IN THE ACTIVITY AND ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 26 ACCEPTING CASH FROM DIFFERENT TRADERS/MEMBERS AND I N TURN ISSUED CHEQUES/DEMAND DRAFT FROM ITS BANK ACCOUNTS IN FAVO UR OF DIFFERENT SUPPLIERS/COMPANIES/PERSONS. IN LIEU OF THIS FACILITY PROVIDED TO THE TRADERS/MEMBERS, SOCIETY USED TO CH ARGE SERVICE CHARGE @RS.100/- PER LAKH. EVEN THIS FACT THAT THE SOCIETY IS CHARGING COMMISSION RS.100 PER LAKH HAS BEEN CONFIR MED BY VARIOUS BUSINESSMAN IN THEIR STATEMENTS RECORDED DU RING THE COURSE OF SURVEY AND ALSO DURING THE POST SURVEY PR OCEEDINGS AND THE DETAILS WERE APPEARING IN THE COMPUTERIZED EXCE L SHEET PREPARED FOR SOME OF THE ASSESSMENT YEARS. IT WAS CONFIRMED BY SOME OF THE TRADERS/PERSONS THAT THEY HAVE DEPOSITE D CASH IN THE BANK ACCOUNT OF THE SOCIETY AND AGAINST WHICH CHEQU E/DEMAND DRAFT WERE ISSUED BY THE SOCIETIES BANK ON THEIR RE QUEST. IN THE WRITTEN SUBMISSIONS ALSO SCREEN SHOTS OF SAMPLE OF CASH RECEIPT, VOUCHER IN THE NAME OF THE SOCIETY SHOWING CASH REC EIVED FROM THE PERSONS/MEMBERS/TRADERS AND THE SCREEN SHOTS OF CHE QUE ISSUED TO VARIOUS BUSINESS CONCERNS ARE PLACED ON RECORD. TH ESE BUSINESS CONCERN INCLUDES PRIVATE LIMITED COMPANIES ALSO. OU R THIS FINDING IS FURTHER CORROBORATED BY THE FACT THAT DURING THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEARS 2012-13 TO 2015-16 CARRIED OUT ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 27 IN THE CASE OF ANOTHER ASSESSEE WHO IS ALSO IN APPE AL BEFORE US I.E. SHRI MANISH KOTHARI AND IN WHOSE HAND SUBSTANTIVE A DDITION HAS BEEN CONFIRMED BY LD. CIT(A), LD. A.O. WHILE EXAMIN ING THE ISSUE OF DEPOSIT OF CASH OF RS.55.54 CRORES IN THE BANK ACCO UNT OF THE SOCIETY FOR ASSESSMENT YEAR 2015-16 (YEAR OF SURVEY ) BIFURCATED THE DETAILS APPEARING IN THE COMPUTER EXCEL SHEET IN TH REE CATEGORIES:- (I) PARTIES SHOWN/ACCEPTED/ADMITTED TRANSACTIONS WI TH THE SOCIETY TOTALLY/PARTIALLY. (II) PARTIES HAVING TRANSACTION NOT FOR PURPOSE OF DEPOSIT WITH BANK ACCOUNT OR TO SAY NOT FOR PURPOSE OF GETTING CHEQUES ISSUED. (III) PARTIES WHO HAVE TOTALLY/PARTIALLY DENIED TRA NSACTIONS WITH THE SOCIETY. 23. IN THE FIRST CATEGORY WHERE THE PARTIES HAVE AD MITTED THE TRANSACTION WITH THE SOCIETY LD. A.O HAS REPRODUCED A LIST OF PERSONS THROUGH WHOM TRANSACTION OF AROUND RS.6,22, 96,066/- WAS CARRIED OUT AND ALL THESE PERSONS HAVE ACCEPTED TO HAVE TAKEN THE SERVICES OF THE SOCIETY FOR GETTING THE CHEQUES ISS UED AGAINST CASH, LD. A.O HAS MADE THE ADDITION OF RS.62,296/- ONLY W HICH IS 0.1% ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 28 (RS.100 PER LAKH) OF THE TOTAL CASH DEPOSIT BY THES E PARTIES OF RS.6,22,96,066/- OBSERVING AS FOLLOWS:- THUS, THE TOTAL DEPOSITS OF RS.6,22,96,066/- HAVE B EEN ADMITTED BY PARTIES MENTIONED IN THE LIST OF ABOVE DURING ASSESSEMENT/V ERIFICATION. SOME OF THE PARTIES HAVE ALREADY REFLECTED THESE TRANSACTIO NS IN THEIR ITR AND SOME OF THE PARTIES HAVE ADMITTED/ACCEPTED TRANSACTIONS AS THEIR UNRECORDED/ UNDISCLOSED TRANSACTIONS. IN CASE OF ACCEPTANCE OF THE AMOUNT TOTALING TO RS.6,22,96,066/- BY VARIOUS PARTIES, COMMISSION IN RESPECT OF THESE DEPOSITS ONLY IS ADDED TO THE INCOME OF SHRI MANISH KOTHARI SUBSTANTIVELY AND ADDITION OF SAME AMOUNT IS MADE PROTECTIVELY IN CASE OF SHRI VARDHMAN SAKH SAHAKARITA MARYADIT, UJJAIN ON THE BA SIS OF THE FACTS ALREADY DISCUSSED SUPRA. COMMISSION IS TAKEN AT RS .100 PER RS.1,00,000/-, ACCORDINGLY AMOUNT OF RS.62,296/- I S ADDED SUBSTANTIVELY IN THE HANDS OF SHRI MANISH KOTHARI AS UNDISCLOSED COMMISSION OF THE YEAR UNDER CONSIDERATION. 24. SIMILARLY IN THE CASE OF SHRI MANISH KOTHARI FO R ASSESSMENT YEAR 2014-15 THE LD. A.O HAS MADE ADDITION OF RS.1, 10,644/- ON THE TRANSACTION VALUE OF RS.11,06,43,811/-, FOR ADD ITION OF RS.48,288/- FOR ASSESSMENT YEAR 2013-14 ON THE TRAN SACTION OF CASH DEPOSITS OF RS.4,82,27,857/- AND ADDITION OF R S.44,284/- FOR ASSESSMENT YEAR 2012-13 ON THE TRANSACTION VALUE OF CASH DEPOSIT OF RS.4,42,84,445/-. THIS ACTION OF THE LD. A.O ON THE VERY SAME SET OF TRANSACTION OF CASH DEPOSIT IN BANK ACCOUNTS COUPLED WITH THE FACT THAT THE LIST OF PERSONS MENTIONED BY LD. A.O IN VARIOUS ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 29 ASSESSMENT YEARS ALSO CARRIED DETAILS OF THEIR PERM ANENT ACCOUNT NUMBER ASSERTS THE FACT THAT THE ASSESSEE SOCIETY W AS UNDULGED IN PROVIDING SERVICES FOR ISSUE OF CHEQUES AGAINST CAS H DEPOSITS USED TO CHARGE COMMISSION @0.1% OF THE TRANSACTION VALUE . 25. APART FROM THIS MODUS OPERANDI OF ASSESSEE SOCIETY OF HAVING ITS SOURCE OF INCOME FROM SERVICE CHARGE FOR PROVID ING CHEQUE/DRAFTS IN LIEU OF CASH RECEIVED FROM THE PARTIES, NO OTHER SOURCE OF INCOME HAS BEEN UNEARTHED BY THE SURVEY TEAM NOR BY THE LD .A.O DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE IMPUGNED HUGE ADDITIONS SEEMS TO BE ILLOGICAL AND MERELY ON SURMI SES AND CONJECTURES WITH NO SUPPORTING EVIDENCE. NO EFFORT S WERE MADE TO KNOW ABOUT WHERE THE ENCASHED CHEQUES WERE ISSUED. INFORMATION WERE AVAILABLE WITH THE BANK AUTHORITIES. IN SOME CASES CHEQUES ARE ISSUED TO PRIVATE LIMITED COMPANIES. ONE CAN EA SILY ASCERTAIN THE RELEVANT INFORMATION BY MAKING ENQUIRY SO AS T O FIND OUT THE PURPOSE OF SUCH TRANSFERS, ACTUAL TRANSACTION HAPPE NED AND WHETHER ASSESSEE SOCIETY WAS ACTUALLY CARRYING OUT ANY OTHER BUSINESS. 26. IN VIEW OF ABOVE, SO FAR AS QUANTUM OF ADDITION TO BE SUSTAINED IN THE HANDS OF SOCIETY IS CONCERNED, ONE OPTION IS TO CALCULATE THE ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 30 SERVICE CHARGE @0.1% (RS.100/- PER LAKH) ON THE TOT AL AMOUNT OF TRANSACTION OF CASH DEPOSITED IN THE BANK ACCOUNT F OR THE YEARS UNDER APPEAL SINCE NO OTHER SOURCE OF INCOME IS PRO VED TO HAVE BEEN EARNED BY THE SOCIETY. SECOND OPTION CAN BE TH AT SIMILAR TYPE OF CASES WHERE THE ASSESSEE IS FOUND TO BE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES OR ENGAGED IN PROVIDING CHEQU E FACILITY BY WAY OF RECEIVING CASH AND ISSUING THE CHEQUE BUT CO MPLETE DETAILS OF THE PARTIES GIVING CASH AND RECEIVED CHEQUE ARE NOT GIVEN BY THE ASSESSEE OR THE REVENUE AUTHORITIES ARE UNABLE TO G ATHER ANY INFORMATION AND NO OTHER INFORMATION IS FOUND AGAIN ST THE ASSESSEE OFHAVING EARNED INCOME FROM SUCH TYPES OF TRANSACTI ONS THEN THE ADDITIONS ARE CONFIRMED TO THE EXTENT OF PEAK CREDI T/PEAK BALANCE IN THE BANK ACCOUNTS. SIMILAR RATIO HAS BEEN LAID BY THE HON'BLE COURTS AND CO-ORDINATE BENCHES IN THE JUDGMENTS/DEC ISIONS REFERRED BY LD. SR. COUNSEL FOR THE ASSESSEE. (I) IN THE CASE OF S. VENKAT REDDY V/S ITO(SUPRA) THE CO- ORDINATE BENCH OF HYDERBAD PLACED RELIANCE ON THE H ON'BLE APEX COURT IN THE CASE OF P.K. NOORJAHAN OBSERVING AS FOLLOWS:- 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E RECORD. IN THE CASE OF P.K. NOORJAHAN (SUPRA), THE HON'BLE SUPREME COURT OBSERVED THAT SECTION 68 OF THE ACT IMPOSES BURDEN ON THE PA RT OF THE ASSESSEE TO EXPLAIN THE SOURCE OF CASH DEPOSITS BUT MERELY B ECAUSE IT COULD NOT ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 31 BE EXPLAINED THE AMOUNT CANNOT AUTOMATICALLY BE ADD ED SINCE THE EXPRESSION 'MAY' USED IN SECTION 68 OF THE ACT IMPO SES AN OBLIGATION ON THE ASSESSING OFFICER TO VERIFY AS TO WHETHER AS SESSEE COULD HAVE EARNED SUCH HUGE INCOME IN ONE YEAR. IN THE INSTANT CASE, IT IS NOT IN DISPUTE THAT THE ASSESSEE'S INCOME EITHER IN THE EA RLIER YEAR OR IN SUBSEQUENT YEARS HAS NEVER CROSSED THE THRESHOLD OF RS. 2 LAKHS IN WHICH EVENT THE ASSESSING OFFICER COULD HAVE KEPT T HE SAME IN MIND WHILE MAKING THE ADDITION. EVEN WHILE COMPUTING THE ASSESSMENT TO THE BEST OF HIS JUDGMENT, UNDER SECTION 144 OF THE ACT, IT IS THE DUTY OF THE ASSESSING OFFICER TO MAKE AN ADDITION ON THE BA SIS OF THE AVAILABLE MATERIAL AND CIRCUMSTANCES OF EACH CASE. JUDGEMENT IS A FACULTY TO DECIDE THE MATTERS WITH WISDOM, TRULY AN D LEGALLY AND IT SHOULD NOT DEPEND ON THE ARBITRARY CAPRICE OF AN OF FICER. IN OTHER WORDS, THOUGH AN ELEMENT OF GUESS WORK IS INVOLVED IN BEST JUDGEMENT IT SHOULD NOT BE A WILD ONE, AS HELD BY T HE HON'BLE SUPREME COURT IN THE CASE OF STATE OF KERALA V. VEL UKUTTI [1966] 60 ITR 239 . IN THE INSTANT CASE, THE ASSESSING OFFICER OUGHT TO HAVE TAKEN INTO CONSIDERATION THE NORMAL TURNOVER OF THE ASSESSEE, THE EXPECTED PROFIT IN EACH YEAR, BASED ON THE EARLIER YEAR'S INCOME DECLARED AND ACCEPTED IN ORDER TO ESTIMATE THE INCO ME OF THE CURRENT YEAR; WHILE HOLDING THAT THERE WAS SOME UNDISCLOSED INCOME ASSESSABLE TO TAX UNDER SECTION 68 OF THE ACT. THE ASSESSEE HAVING FURNISHED THE BANK STATEMENT ASSESSING OFFICER COUL D HAVE VERIFIED AND NOTICED THAT THERE WERE CREDITS AND CORRESPONDI NG DEBITS WHICH WOULD GIVE AN INDICATION THAT SOME AMOUNT HAS BEEN RECYCLED AND IT IS A SETTLED PRINCIPLE THAT IN SUCH CASES ORDINARIL Y, PEAK CREDIT IS TAKEN INTO CONSIDERATION FOR THE PURPOSE OF MAKING AN ADDITION. ON A CONSPECTUS OF THE MATTER, WE ARE OF THE VIEW THAT A N ADDITION OF PEAK CREDIT WOULD MEET THE ENDS OF JUSTICE. WE, THEREFOR E, DIRECT THE ASSESSING OFFICER ACCORDINGLY. ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 32 (II) THE CO-ORDINATE BENCH KOLKATA IN THE CASE OF A MIT AGRAWAL (SUPRA) RELIED ON THE DECISION OF KOLKATA TRIBUNAL IN THE C ASE OF SHRI BINOD KUMAR JHA V/S ITO ITA NO.577/KOL/2013 ORDER DATED 20.11.2 015 OBSERVED AS FOLLOWS:- 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FOREGOING DISCUSSION, WE FIND THAT AUTHORITIES BELOW HAVE TREATED THE ENTIRE CASH DEPO SITS WITH THE BANK ACCOUNT OF ASSESSEE AS UNDISCLOSED INCOME ON T HE PREMISE THAT ASSESSEE FAILED TO PRODUCE THE PARTIES TO WHOM THE CHEQUES WERE ISSUED. AUTHORITIES BELOW HAS ALSO DENIED THE ARGUM ENTS MADE BY ASSESSEE THAT HE WAS ENGAGED IN THE BUSINESS OF ACC OMMODATING ENTRIES PROVIDED TO VARIOUS PARTIES. NOW THE QUESTI ON BEFORE US ARISE SO AS TO WHETHER THE CASH DEPOSIT IN THE BANK ACCOU NT OF ASSESSEE AMOUNTS TO UNDISCLOSED INCOME. IN THE AFORESAID FAC TS AND CIRCUMSTANCES, WE FIND THAT VARIOUS COURTS HAVE HEL D TO APPLY THE PEAK CREDIT THEORY AND IN THIS REGARD, WE RELY IN T HE ORDER OF HONBLE KOLKATA TRIBUNAL IN THE CASE OF BINOD KUMAR JHA VS. ITO WARD 25(2) IN ITA 577/KOL/2013 DATE OF ORDER 20.11.2015. THE R ELEVANT EXTRACT OF THE ORDER IS REPRODUCED BELOW. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM THE FACTS O F THE CASE THAT THE ASSESSEE HAS DEPOSITED CASH AMOUNTING TO RS.83,48,1 6,130/- IN SIX UNDISCLOSED BANK ACCOUNT MAINTAINED WITH AXIS BANK LTD. THE ASSESSEE BEFORE AO FILED WORKING OF PEAK CREDIT IN RELATION TOCASH DEPOSITS MADE IN THESE SIX BANK ACCOUNTS AND REQUES TED THE AO TO ASSESS THE PEAK CREDIT AMOUNTING TO RS.1,01,40,000/ -. THE ASSESSEE CLAIMED TO HAVE COMPUTED THE PEAK CREDIT OF THESE S IX BANK ACCOUNTS TAKING ALL THE DEPOSITS AND WITHDRAWALS. THE AO WHI LE FRAMING ASSESSMENT TREATED THE UNEXPLAINED CASH CREDIT/UNEX PLAINED INVESTMENT IN BANK I.E. CASH DEPOSITS MADE IN THESE SIX BANK ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 33 ACCOUNTS AND ADDED TO THE RETURNED INCOME OF THE AS SESSEE IN TOTAL. THE ASSESSEE NOW BEFORE US CLAIMED THAT HE IS ENGAG ED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES AND FOR THIS HE PLACED RELIANCE ON THE STATEMENT RECORDED BY THE AO U/S. 1 31 OF THE ACT ON 13.12.2011 WHEREIN HE EXPLAINED THE MODUS OPERANDI OF HIS BUSINESS. THE RELEVANT STATEMENT READS AS UNDER: BINOD KUMAR JHA, AY 2009-10 BINOD KUMAR JHA, AY 200 9-10 BINOD KUMAR JHA, AY 2009-10 BINOD KUMAR JHA, AY 2009-10 I N VIEW OF THE ABOVE STATEMENT THE ASSESSEE CLAIMED THAT HE IS ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES TO VARI OUS PARTIES ON COMMISSION BASIS AND THIS COMMISSION HAS ALL ALONG BEEN DISCLOSED BY HIM AS BUSINESS INCOME IN THE RETURNS OF INCOME PARTICULARLY FOR AYS 2008-09, 2009-10 AND 2010-11. NOW BEFORE US ASS ESSEE'S COUNSEL ARGUED THAT EVEN PEAK CREDIT CANNOT BE ADDE D IN THE HANDS OF THE ASSESSEE ONLY FINANCE COMMISSION EARNED BY H IM @ 0.25% TO 0.50% AT THE BEST CAN BE ASSESSED. LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO PAPER BOOK FILED BY ASSESSEE AND PARTICULARLY PAGES 1 TO 41, WHEREIN EXTRACT FROM BANK STATEMENT OF SIX UNDISCLOSED BANK ACCOUNTS OF AXIS BANK AND CALCULAT ION SHOWING PEAK CREDIT AFTER CONSOLIDATION IS ENCLOSED. THERE IS NO DISPUTE ABOUT THE CASH DEPOSITED IN THESE SIX BANK ACCOUNTS MAINT AINED WITH AXIS BANK LTD. WE FIND FROM THE ABOVE STATEMENT RECORDED BY THE AO OF THE ASSESSEE PARTICULARLY QUESTION NOS. 14 AND 15 T HAT ASSESSEE IS ONLY A CONDUIT IN A BIG SYNDICATE OF ACCOMMODATION ENTRY PROVIDERS AND HE HAS EARNED ONLY COMMISSION INCOME FOR PROVID ING ACCOMMODATION ENTRY. THE ASSESSEE USED TO RECEIVE C ASH AND DEPOSIT THE SAME IN ONE OF THESE SIX BANK ACCOUNTS AND ISSUED CHEQUE OF THE SAME AMOUNT AS CAN BE SEEN FROM THE E XTRACTS OF BANK STATEMENTS OF THESE SIX BANK ACCOUNTS FILED BY ASSE SSEE IN ITS PAPER BOOK. ON THE VERY DATE OF CASH DEPOSIT, CHEQUE IS I SSUED OF THE SIMILAR AMOUNT. THIS CLEARLY REVEALS THAT THE ASSES SEE IS BEING USED FOR PROVIDING ACCOMMODATION ENTRY ONLY. ALL THE DEP OSITS MADE IN THESE SIX BANK ACCOUNTS HAVE BEEN TRANSFERRED TO MA PLE ADVISORY SERVICES PVT. LTD. AND IN TURN MAPLE ADVISORY SERVI CES PVT. LTD. HAS FURTHER TRANSFERRED THIS AMOUNT TO SIX PRIVATE LIMI TED COMPANIES NAMELY, GOKUL DISTRIBUTORS, INDIGO COMMOTRADE, JUPI TER TRADELINK, NEW ERA COMMOTRADE, SWIFT DISTRIBUTORS AND ZENITH M ANAGEMENT AND ALL THESE PRIVATE LIMITED COMPANIES ARE HAVING THEIR BANK BINOD KUMAR JHA, AY 2009-10 ACCOUNTS IN THE SAME BANK BRA NCH. THIS MODUS OPERANDI CLEARLY REVEALS THAT THE ASSESSEE IS MERELY AN ACCOMMODATION ENTRY PROVIDER AND NOTHING ELSE. 6. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, TH E LD. COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF COORDINATE B ENCH IN THE CASE OF ITO VS. SHRI PIYUSH PODDAR IN ITA NO. 1050/KOL/2 011 FOR AY ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 34 2006-07 DATED 07.09.2015, WHEREIN EXACTLY ON SIMILA R CIRCUMSTANCES, THE TRIBUNAL HAS DIRECTED THE AO TO ASSESS THE PEAK CREDIT AND BY OBSERVING HELD AS UNDER: '10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. IT IS SEEN THAT THE ASSESSEE A PART FROM HIS REGULAR INCOME HAD A BANK ACCOUNT WITH CENTRAL BANK OF INDIA WHICH WAS USED BY HIM ONLY FOR THE LIMITED PURPOSE OF PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PARTIES. INITIALLY THE ASSESSEE TOOK A STAND THAT HE WAS DERIVING FINANCE COMMISSION @.2 5% OF ALL THE TRANSACTIONS IN THE ACCOMMODATION ENTRY BUSINESS AN D OFFERED THE SAME TO TAX., HOWEVER, HE SHIFTED HIS STAND BY ACCE PTING THE PEAK CREDIT THEORY BEFORE THE LD. CIT(A). THIS IS EVIDEN T FROM THE FACT THAT HE HAD NOT PREFERRED FURTHER APPEAL BEFORE THE TRIB UNAL AGAINST THE LD. CIT(A)'S ORDER. IN ACCORDANCE WITH THE DIRECTIO NS OF THE HON'BLE CALCUTTA HIGH COURT, WE HAD EXAMINED THE VERACITY O F THE CLAIM OF PEAK CREDIT THEORY MADE BY THE ASSESSEE IN RESPECT OF ALL THE TRANSACTIONS IN CENTRAL BANK OF INDIA. IT IS OBSERV ED THAT THE ASSESSEE HAD ROTATED HIS OWN FUNDS IN CENTRAL BANK OF INDIA FOR PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PARTIES. IT IS NOT DISPUTED THAT THE GENUINENESS OF THE TRANSACTION CO ULD NOT BE PROVED BY THE ASSESSEE BY MENTIONING THE NAMES, ADDRESSES, PAN, CONFIRMATION OF THE PARTIES TO WHOM THE PAYMENTS WE RE MADE AND FROM PAYMENTS WERE RECEIVED BY THE ASSESSEE. HENCE IT IS PROVED THAT TRANSACTIONS CONTAINED IN THE BANK ACCOUNT ARE NOT GENUINE. ONCE THE TRANSACTIONS IN THE BANK ACCOUNT ARE PROVE D INGENUINE THEN IT IS AN ACCEPTED PRACTICE OF ADOPTING THE PEAK CRE DIT THEORY FOR THE PURPOSE OF DETERMINATION OF UNDISCLOSED INCOME OF T HE ASSESSEE. HENCE, RELIANCE PLACED BY THE LD. DR IN THE DECISIO N OF THE HON'BLE ALLAHABAD HIGH COURT REPORTED IN 276 ITR 38 WHICH R EJECTED THE CONCEPT OF PEAK CREDIT THEORY IS NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE. IN THE CASE BEFORE THE HON'BLE ALLAHA BAD HIGH COURT, THE ASSESSEE CLAIMED THAT THE CREDITS IN THE BANK A CCOUNT REPRESENTED GENUINE LOANS BORROWED AND THE CHARACTE R OF THE LOAN TRANSACTIONS WERE NOT DISPUTED AND HENCE THEIR LORD SHIPS OF ALLAHABAD HIGH COURT HELD THAT THE PEAK CREDIT THEO RY WOULD NOT BE APPLICABLE IN THAT CASE. BUT IN THE FACTS OF THE IN STANT CASE, THE ASSESSEE HAD CLEARLY OWNED UP THE TRANSACTIONS AND THAT HE IS ENGAGING HIMSELF IN ACCOMMODATION ENTRY BUSINESS WI TH HIS OWN FUNDS AS WELL AS FUNDS RECEIVED FROM PARTIES TO WHO M THE ACCOMMODATION ENTRIES ARE PROVIDED BY THE ASSESSEE AND THE NAMES AND ADDRESSES OF SUCH PARTIES COULD NOT BE PROVIDED BY HIM FOR WANT OF MAINTENANCE OF BOOKS AND DETAILS. THIS GOES TO PROVE THAT THE GENUINENESS OF THE TRANSACTIONS CONTAINED IN TH E ACCOMMODATION ENTRY BUSINESS AS REFLECTED IN THE SAID BANK ACCOUN T COULD NOT BE ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 35 PROVED BY THE ASSESSEE. THIS IS A DISTINCT AND CRUC IAL FACTOR WHICH DISTINGUISHES THE DECISION RENDERED BY THE HON'BLE ALLAHABAD HIGH COURT IN 276 ITR 38 WHICH WAS HEAVILY RELIED UPON B Y THE REVENUE. 11. ON PERUSAL OF THE BANK ACCOUNT WITH CENTRAL BAN K OF INDIA, WE ARE SATISFIED THAT THE DEPOSITS AND WITHDRAWALS ARE CLOSELY LINKED WITH AND RELATED TO EACH OTHER ON DAY-TO- DAY BASIS . IT IS ALSO OBSERVED THAT THE LD. AO HAD NOT BROUGHT ANY MATERI AL OR EVIDENCE ON RECORD TO PROVE THAT THE WITHDRAWALS MADE BY THE ASSESSEE FROM THE SAID BANK ACCOUNT HAVING UTILIZED FOR MAKING AN Y OTHER INVESTMENTS OUTSIDE THE BOOKS OR MEANT FOR ANY OTHE R PURPOSE OTHER THAN FOR ACCOMMODATION ENTRY BUSINESS. IT IS PERTIN ENT TO LOOK INTO THE DECISION RENDERED BY THE KOLKATA TRIBUNAL IN TH E CASE OF MAHESH KUMAR GUPTA IN IT(SS)A. NO.11/KOL/2014 DATED 0.2.20 05 WHEREIN ITAT OBSERVED THAT THE CLAIM OF THE ASSESSEE WAS TH AT THE CHEQUE WITHDRAWALS WERE FOR GIVING LOAN FOR THE SHORT PERI OD. HELD AS FOLLOWS :- BINOD KUMAR JHA, AY 2009-10 'THE AO CANN OT REFUSE TO GRANT SET OFF FOR THE WITHDRAWAL MADE BY CHEQUE WIT HOUT BRINGING ON RECORD ANY MATERIALS SO THAT THE AMOUNT WITHDRAWN B Y CHEQUE CANNOT HAVE BEEN RECEIVED BACK BY THE ASSESSEE AND UTILIZED BY HIM IN MAKING SUBSEQUENT DEPOSITS BY CHEQUE. TAKING ALL THIS INTO CONSIDERATION, WE ARE OF THE CONSIDERED OPINION THA T AO SHOULD ADOPT PEAK CREDIT METHOD TO ARRIVE AT THE UNDISCLOS ED INCOME OF THE ASSESSEE IN THE UNDISCLOSED BANK ACCOUNT NO.SB 6664 WITH THE SYNDICATE BANK.' REFERENCE MAY ALSO BE DRAWN TO THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF CIT VS SMT. P.K.NOORJEHAN REPO RTED IN 237 ITR 570(SC) WHEREIN THEIR LORDSHIPS HAVE HELD THAT MERE UNSATISFACTORINESS OF THE EXPLANATION OFFERED BY TH E ASSESSEE, DOES NOT, AND NEED NOT, AUTOMATICALLY RESULT IN DEEMING THE VALUE OF INVESTMENT TO BE THE INCOME OF THE ASSESSEE. THAT I S STILL A MATTER WITHIN THE DISCRETION OF THE OFFICER AND, THEREFORE , OF THE TRIBUNAL. IN OTHER WORDS, THE DISCRETION HAS BEEN CONFERRED ON T HE INCOME TAX OFFICER U/S 69 OF THE ACT TO TREAT THE SOURCE OF IN VESTMENT AS THE INCOME OF THE ASSESSEE IF THE EXPLANATION OFFERED B Y THE ASSESSEE IS NOT FOUND SATISFACTORY AND THE SAID DISCRETION HAS TO BE EXERCISED KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PARTICULAR CASE. THE INCOME TAX OFFICER IS NOT OBLIGED TO TREAT THE VALUE OF INVESTMENT AS INCOME IN EVERY CASE WHERE THE EXPLANATION OFFER ED BY THE ASSESSEE IS FOUND TO BE UNSATISFACTORY. 12. HENCE IT WOULD BE UNREASONABLE TO TAX ALL THE D EPOSITS IN THE BANK ACCOUNT OF THE ASSESSEE. TO THIS EXTENT, WE DO NOT APPRECIATE THE ACTION OF THE LD. AO IN TAXING THE ENTIRE CREDI TS OF ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 36 RS.6,30,89,413/- AS UNDISCLOSED INCOME OF THE ASSES SEE FOR A.Y.2006-07. TO PUT THIS ONGOING DISPUTE TO REST, I N THE INTEREST OF JUSTICE AND FAIR PLAY, WE DIRECT THE LD. AO TO ASSE SS THE PEAK CREDIT IN THIS CASE IN RESPECT OF BOTH CASH AS WELL AS CHE QUE TRANSACTION CONTAINED IN THE SAID BANK ACCOUNT BY VERIFYING THE VERACITY OF THE FIGURES WORKED OUT BY THE ASSESSE AND BRING TO TAX THE SAME. WE DRAW SUPPORT FROM THE DECISION RENDERED BY 'C' BENC H OF KOLKATA ITAT IN ITA NO.2069/KOL/2010 FOR A.Y.2007-08 DATED 23.03.2012 IN THE CASE OF ITO VS SHRI GANGA PRASAD VYAS WHEREIN I T WAS HELD THAT 'WE FIND THAT THE ASSESSEE HAS FILED STATEMENT OF P EAK CREDIT I.E. DEPOSIT AND WITHDRAWALS FROM THE BANK ACCOUNT OF SB BJ WHEREIN THE PEAK CREDIT AS ON 24.01.2007 WAS AT RS.1,80,247 /-. WE FURTHER FIND THAT THE MONEY DEPOSITED IN THE BANK ACCOUNT W AS WITHDRAWN EITHER ON THE SAME DAY OR ON SUBSEQUENT DATES. IT I S SEEN THAT THE TOTAL ADDITION OF THE AGGREGATE DEPOSITS IN THE BAN K ACCOUNT AFTER GIVING BENEFIT OF WITHDRAWALS IS THE PEAK AMOUNT AN D IN THAT CASE PEAK AMOUNT IS TO BE ADDED. WE FIND THAT THE ASSESS EE HAS MAINTAINED A BANK ACCOUNT WHICH IS ADMITTEDLY NOT D ISCLOSED TO THE REVENUE AND THERE IS NO DOUBT THAT THE DEPOSITS IN THIS BANK ACCOUNT REPRESENTS UNDISCLOSED INCOME OF THE ASSESSEE TO BE ASSESSED AS UNDISCLOSED INCOME BUT QUA ONLY THE PEAK AMOUNT. TH E ASSESSEE HAS FILED COMPLETE STATEMENT OF PEAK DEPOSIT AND WI THDRAWALS WHICH IS AT RS.1,87,247/- AND BEFORE CIT(A). WE ARE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY DIRECTED THE AO TO RESTRICT THE ADDITION TO THE EXTENT OF PEAK AMOUNT AND WE CONFIRM THE SAME. THIS ISSUE OF REVENUE'S APPEAL IS DISMISSED.' 13. HOWEVER, WE WOULD LIKE TO MAKE IT CLEAR THAT TH IS DIRECTION TO THE LD. AO TO ASSESS THE PEAK CREDIT IN THIS CASE SHOUL D NOT BE CONSTRUED AS A CONCLUSIVE PROOF IN THE HANDS OF THE BENEFICIA RY IN THE SAID BANK ACCOUNT FOR EXPLAINING THEIR AMOUNTS. ACCORDIN GLY, THIS ISSUE IS SET ASIDE TO THE FILE OF THE LD. AO TO COMPLETE THE ASSESSMENT IN ACCORDANCE WITH THE DIRECTIONS MENTIONED HEREINABOV E. ' 7. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE DIRECT THE AO TO ASSESS THE PEAK CREDIT BEING A SUM OF RS.1,01,40 ,000/- AS COMPUTED BY ASSESSEE ON THE BASIS OF DEPOSITS MADE IN THESE SIX BANK ACCOUNTS WITH AXIS BANK LTD. IN LIEU OF CASH D EPOSITS ADDED BY THE AO AT RS.83,48,16,130/-. ACCORDINGLY, THE AO WI LL VERIFY THE PEAK AND WILL MAKE BINOD KUMAR JHA, AY 2009-10 ADDI TION OF THE PEAK AMOUNT ONLY. ACCORDINGLY, THIS ISSUE OF ASSESS EE'S APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. FROM THE ABOVE, WE CONCLUDE THAT ASSESSEE HAS FURNI SHED HIS STATEMENT ON OATH STATING THAT HE IS ENGAGED IN PRO VIDING ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 37 ACCOMMODATING ENTRIES TO VARIOUS PARTIES AND FOR TH IS ACT EARNED NOMINAL AMOUNT OF COMMISSION INCOME. FROM THE PERUS AL OF BANK STATEMENT, WE FIND THAT CASH WAS DEPOSITED AND IMME DIATELY IT WAS TRANSFERRED TO THE ACCOUNT OF THE PARTY LEAVING NEG LIGENT AMOUNT OF BALANCE IN THE BANK ACCOUNT OF ASSESSEE. IN OUR CON SIDERED VIEW, WE CONCLUDE THAT ASSESSEE IS ENGAGED IN PROVIDING ACCO MMODATED ENTRIES TO THE PARTIES. HAD THERE BEEN THE BUSINESS OF THE IRON AND STEEL OF THE ASSESSEE THEN THE LOWER AUTHORITIES SH OULD HAVE BROUGHT ON RECORD THE EVIDENCE OF THE BUSINESS BUT THE LD. DR FAILED TO BRING THE SAME. WE ALSO FIND THAT THE CASH WAS IMMEDIATEL Y WITHDRAWN AFTER THE DEPOSIT OF THE CASH. THIS TRANSACTION SHO WS THAT THE MONEY DOES NOT BELONG TO THE ASSESSEE. IN THE ABSENCE OF ANY INFORMATION ABOUT THE IRON & STEEL BUSINESS OF THE ASSESSEE, WE ARE ACCORDINGLY INCLINED TO APPLY THE PEAK CREDIT THEORY TO TAX THE UNDISCLOSED INCOME OF ASSESSEE. WE REVERSE THE ORDER OF AUTHORI TIES BELOW. AO IS DIRECTED ACCORDINGLY. THIS GROUND OF ASSESSEE IS AL LOWED IN TERMS OF ABOVE. ( III) HON'BLE KOLKATA TRIBUNAL IN THE CASE OF SHRI B INOD KUMAR JHA V. INCOME TAX OFFICER, WD-25 (2), KOLKATA (ITA NO. 577/KOL/2013) VIDE ORDER DATED 20/11/2015 HONBLE T RIBUNAL HELD THAT : IN VIEW OF THE ABOVE STATEMENT THE ASSESSEE CLAIMED THAT HE IS ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PARTIES ON COMMISSION BASIS AND THIS COMMIS SION HAS ALL ALONG BEEN DISCLOSED BY HIM AS BUSINESS INCOME IN T HE RETURNS OF INCOME PARTICULARLY FOR AYS 2008-09, 2009-10 AND 20 10-11. NOW BEFORE US ASSESSEES COUNSEL ARGUED THAT EVEN PEAK CREDIT CANNOT BE ADDED IN THE HANDS OF THE ASSESSEE ONLY FINANCE COM MISSION EARNED BY HIM @ 0.25% TO 0.50% AT THE BEST CAN BE ASSESSED . LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO PAPER BOOK F ILED BY ASSESSEE AND PARTICULARLY PAGES 1 TO 41, WHEREIN EXTRACT FRO M BANK STATEMENT OF SIX UNDISCLOSED BANK ACCOUNTS OF AXIS BANK AND C ALCULATION ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 38 SHOWING PEAK CREDIT AFTER CONSOLIDATION IS ENCLOSED . THERE IS NO DISPUTE ABOUT THE CASH DEPOSITED IN THESE SIX BANK ACCOUNTS MAINTAINED WITH AXIS BANK LTD. WE FIND FROM THE ABO VE STATEMENT RECORDED BY THE AO OF THE ASSESSEE PARTICULARLY QUE STION NOS. 14 AND 15 THAT ASSESSEE IS ONLY A CONDUIT IN A BIG SYNDICA TE OF ACCOMMODATION ENTRY PROVIDERS AND HE HAS EARNED ONL Y COMMISSION INCOME FOR PROVIDING ACCOMMODATION ENTRY. THE ASSES SEE USED TO RECEIVE CASH AND DEPOSIT THE SAME IN ONE OF THESE S IX BANK ACCOUNTS AND ISSUED CHEQUE OF THE SAME AMOUNT AS CAN BE SEEN FROM THE EXTRACTS OF BANK STATEMENTS OF THESE SIX BANK ACCOU NTS FILED BY ASSESSEE IN ITS PAPER BOOK. ON THE VERY DATE OF CAS H DEPOSIT, CHEQUE IS ISSUED OF THE SIMILAR AMOUNT. THIS CLEARLY REVEA LS THAT THE ASSESSEE IS BEING USED FOR PROVIDING ACCOMMODATION ENTRY ONLY. ALL THE DEPOSITS MADE IN THESE SIX BANK ACCOUNTS HAVE B EEN TRANSFERRED TO MAPLE ADVISORY SERVICES PVT. LTD. AND IN TURN MA PLE ADVISORY SERVICES PVT. LTD. HAS FURTHER TRANSFERRED THIS AMO UNT TO SIX PRIVATE LIMITED COMPANIES NAMELY, GOKUL DISTRIBUTORS, INDIG O COMMOTRADE, JUPITER TRADELINK, NEW ERA COMMOTRADE, SWIFT DISTRI BUTORS AND ZENITH MANAGEMENT AND ALL THESE PRIVATE LIMITED COM PANIES ARE HAVING THEIR BANK ACCOUNTS IN THE SAME BANK BRANCH. THIS MODUS OPERANDI CLEARLY REVEALS THAT THE ASSESSEE IS MEREL Y AN ACCOMMODATION ENTRY PROVIDER AND NOTHING ELSE. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, THE L D. COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF COORDINATE BENCH IN THE CASE OF ITO VS. SHRI PIYUSH PODDAR IN ITA NO. 1050/KOL/2011 FOR AY 2006- 07 DATED 07.09.2015, WHEREIN EXACTLY ON SIMILAR CIR CUMSTANCES, THE TRIBUNAL HAS DIRECTED THE AO TO ASSESS THE PEAK CRE DIT 7. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE DIRECT THE AO TO ASSESS THE PEAK CREDIT BEING A SUM OF RS.1,01,40,00 0/- AS COMPUTED ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 39 BY ASSESSEE ON THE BASIS OF DEPOSITS MADE IN THESE SIX BANK ACCOUNTS WITH AXIS BANK LTD. IN LIEU OF CASH DEPOSI TS ADDED BY THE AO AT RS.83,48,16,130/-. ACCORDINGLY, THE AO WILL V ERIFY THE PEAK AND WILL MAKE ADDITION OF THE PEAK AMOUNT ONLY. ACC ORDINGLY, THIS ISSUE OF ASSESSEES APPEAL IS PARTLY ALLOWED FOR ST ATISTICAL PURPOSES. (IV) HON'BLE GUJARAT HIGH COURT IN THE CASE OF COMM ISSIONER OF INCOME-TAX- III V. TIRUPATI CONSTRUCTION CO [2015] 55 TAXMANN.COM 308 (GUJARAT) HONBLE HIGH COURT HELD T HAT : 7. AT THE OUTSET, IT IS REQUIRED TO BE NOTED THAT, WH ILE APPRECIATING A DOCUMENT, IT IS REQUIRED TO BE CONSIDERED IN ITS EN TIRETY AND IT CANNOT BE CONSIDERED IN PART. IN THE CASE ON HAND, WHILE A PPRECIATING THE PAPERS / DOCUMENTS, WHICH ACCORDING TO THE ASSESSIN G OFFICER, CONTAINED ACCOUNTED AND UNACCOUNTED TRANSACTIONS ON THE PART OF THE RESPONDENT-ASSESSEE, SHE NOT ONLY FAILED TO EXAMINE IT PROPERLY BUT ALSO FAILED IN ASSESSING THE INCOME AS PER LAW. FUR THER, THOUGH, THE AO, HERSELF, HAD PREPARED THE ACCOUNT OF PROFIT AND LOSS IN RESPECT OF ACCOUNTED AND UNACCOUNTED ENTRIES, SHE DID NOT ASSI GN ANY REASON, AS TO WHY THE PROFIT AND LOSS ACCOUNT OF UNACCOUNTE D TRANSACTIONS OF THE RESPONDENT-ASSESSEE CANNOT BE BELIEVED TO BE TR UE. MOREOVER, THE AO ALSO DID NOT TAKE INTO CONSIDERATION THE EXPLANA TIONS TENDERED BY THE RESPONDENT-ASSESSEE VIDE LETTERS DATED 10.12.20 08 AND 29.12.2008. EVEN, THE WORKING OF THE PEAK BASED ON THE SEIZED DIARY GIVEN BY THE RESPONDENT-ASSESSEE FOR THE CONCERNED ASSESSMENT YEARS WAS ALSO OVERLOOKED BY THE AO AND, HERE AGAIN , NO REASON WAS ASSIGNED FOR THE SAME. WE ARE, THEREFORE, OF TH E OPINION THAT THE CIT(A) RIGHTLY HELD THAT IT WOULD BE JUST AND PROPE R, IF, THE INCOME FROM THE TRANSACTIONS RECORDED IN THE SEIZED DIARY ARE DETERMINED ON ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 40 THE BASIS OF HIGHEST PEAK, AS INCREASED BY THE NET PROFIT OF 5 PER CENT ON THE RECEIPTS AND TAXED ACCORDINGLY, FOR THE RELE VANT ASSESSMENT YEARS. WE DO NOT FIND THAT THE CIT(A) AND ITAT HAS COMMITTED ANY JURISDICTIONAL ERROR IN PASSING THE IMPUGNED ORDERS 27. THUS ON EXAMINING THE FACTS OF THE INSTANT CASE IN THE LIGHT OF ABOVE DECISIONS, WE FIND THAT THE FACTS ARE SIMILAR SO MUCH SO THAT IN ALL THESE CASES THE ASSESSEES WERE EITHER ENGAGE D IN PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PARTIES OR WERE NO T ABLE TO EXPLAIN THE SOURCE OF CASH DEPOSIT AND CHEQUES ISSU ED AND NO OTHER BUSINESS OR OTHER SOURCE OF INCOME WAS FOUND TO BE CARRIED OUT BY THESE ASSESEES HAVING NEXUS TO THE ALLEGED DEPOSIT S. SIMILAR IS THE CASE OF ASSESSEE SOCIETY WHICH BEING A SEPARATE LEG AL ENTITY IS NOT FOUND TO BE ENGAGED IN REGULAR BUSINESS ACTIVITIES AND THERE ARE REGULAR CASH DEPOSITS AND CORRESPONDING CHEQUE ISSU E IN THE BANK ACCOUNTS (DULY ENCAHSED) HELD IN THE NAME OF THE AS SESSEE SOCIETY. THEREFORE IN THIS SITUATION THE REVENUE AUTHORITIES CAN ALSO SUSTAIN THE ADDITION TO THE EXTENT OF PEAK BALANCE. THE AS SESSEE SOCIETY HAS PROVIDED FOLLOWING WORKING OF THE YEARWISE CUMULATI VE PEAK:- S.NO. ASST. YEAR YEARWISE PEAK COMULATIVE PEAK 1 2008-09 40,75,856 40,75,856 ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 41 2 2009-10 3,47,057 44,22,913 3 2010-11 12,42,542 56,65,455 4 2011-12 11,74,432 68,39,887 28. WE THEREFORE IN THE GIVEN FACTS AND CIRCUMSTANC ES OF THE CASE AND IN VIEW OF THE DECISION REFERRED HEREIN ABOVE W HICH ARE SQUARELY APPLICABLE IN THE CASE OF THE ASSESSEE ARE OF THE C ONSIDERED VIEW THAT FIRSTLY THE ACTION OF LD. CIT(A) DELETING THE PROTECTIVE ADDITION MADE IN THE HANDS OF THE SOCIETY WAS NOT JUSTIFIED SINCE THE TRANSACTIONS OF CASH DEPOSITS AND CHEQUE ISSUANCE W ERE CARRIED OUT THROUGH BANKING ACCOUNT OF THE REGISTERED CO-OPERAT IVE SOCIETY RUNNING FOR LAST MANY YEARS IGNORING THE FACT THAT THE SOCIETY IS A SEPARATE LEGAL ENTITY HAVING ITS PERMANENT ACCOUNT NUMBER, SECONDLY LD. CIT(A) ERRED IN CONFIRMING THE SUBSTAN TIVE ADDITION IN THE HANDS OF THE PRESIDENT OF THE SOCIETY MR. MANIS H KOTHARI WHO WAS MERELY AN OFFICE BEARER APPOINTED BY THE BOARD MEMBERS OF THE SOCIETY PROVIDING HONOURABLE SERVICES AND THERE IS NO IOTA OF EVIDENCE TO SHOW THE NEXUS OF THE ALLEGED TRANSACTI ON CARRIED OUT THROUGH BANK ACCOUNT HELD IN THE NAME OF THE SOCIET Y WITH ANY OF THE OFFICE BEARER AND THIRDLY AS REGARD TO QUANTUM OF ADDITION TO BE ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 42 CONFIRMED IN THE HANDS OF THE ASSESSEE SOCIETY THE SAME SHOULD BE HIGHER OF THE TWO AMOUNTS NAMELY SERVICE CHARGE @RS.100 PER LAKH (0.1%) OF THE ALLEGED CASH DEPOSITED IN THE BANK AC COUNT OR THE YEARWISE PEAK BALANCE OF ALL THE BANK ACCOUNTS OF THE SOCIETY. THIS EXERCISE SHOULD BE CARRIED OUT AT THE END OF THE L D. A.O IN ORDER TO MAKE NECESSARY ADDITION IN THE HANDS OF TH SOCIETY. IN THE RESULT COMMON ISSUE RAISED BY THE REVENUE IN THE CASE OF T HE ASSESSEE SOCIETY THROUGH ITA NO.286 TO 289/IND/2018 FOR ASSE SSMENT YEARS 2008-09 TO 2011-12 ARE PARTLY ALLOWED. 29. NOW WE TAKE UP THE APPEALS OF THE ASSESSEE NAME LY SHRI MANISH KOTHARI FOR ASSESSMENT YEAR 2008-09 TO 2015- 16 VIDE ITA NO.719 TO 722/IND/2017 & 862 TO 86/IND/2019. THOUGH THE ASSESSEE HAS RAISED DETAILED GROUNDS OF APPEAL CHAL LENGING THE RELEVANT FINDING OF LD. CIT(A), HOWEVER THEY CAN BE SUMMARIZED IN TO FOLLOWING EFFECTIVE GROUNDS:- (I) CHALLENGING THE REOPENING OF THE COMPLETED ASS ESSMENTS FOR ASSESSMENT YEARS 2008-09 TO 2015-16; (II) CHALLENGING THE SUBSTANTIVE ADDITION FOR UNEX PLAINED INVESTMENT U/S 69 OF THE ACT MADE FOR THE ALLEGED CASH ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 43 DEPOSITS IN THE BANK ACCOUNT OF THE SOCIETY NAME LY SHREE VARDHMAN SAKH SKARITA MARYADIT. THE YEARWIS E ADDITION IS MENTIONED BELOW:- ASST.YEAR AMOUNT 2008 - 09 2015-16 9,23,93,228/ - ) 13,90,35,137/- (A.Y. 2009-10) 17,69,03,922/- (A.Y 2010-11) 26,21,59,360/- (A.Y 2011-12) 34,48,78,938 & 2,53,43,026 (37,02,21,964) (A.Y 2012-13) 36,54,12,434 & 15,85,15,839 (52,39,28,273) (2013-14) 65,07,34,968 & 9,42,00,954 (2014-15) 35,16,71,541 & 14,14,62,089 (49,31,33,63) (A.Y 2015-16) (III) ADDITIONS MADE ON THE BASIS OF DOCUMENTS FOU ND DURING THE COURSE OF SURVEY U/S 133A OF THE ACT AT THE PR EMISES OF ASSESSEE SHRI MANISH KOTHARI. (IV) APART FROM THE ABOVE THE REMAINING GROUNDS ARE EITHER CONSEQUENTIAL IN NATURE RELATING TO INTEREST U/S 23 4A & 234B OF THE ACT OR PREMATURE AND OTHERS ARE GENERAL IN NATURE. 30. AS REGARDS THE FIRST COMMON ISSUE CHALLENGING T HE REASSESSMENT PROCEEDINGS AND THE ISSUANCE OF NOTICE U/S 148 OF THE ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 44 ACT COMMONLY RAISED FOR ALL THE ASSESSMENT YEARS 20 08-09 TO 2015- 16, AT THE OUTSET LD. SR. COUNSEL FOR THE ASSESEE R EQUESTED FOR NOT PRESSING THIS LEGAL GROUND. SINCE THE LEGAL GROUND CHALLENGING THE REOPENING OF THE ASSESSMENT AND THE LEGALITY OF ISS UANCE OF NOTICE U/S 148 OF THE ACT IS NOT PRESSED THE SAME IS DISMI SSED AS NOT PRESSED. 31. NOW WE TAKE UP SECOND COMMON ISSUE FOR THE SUBS TANTIVE ADDITION CONFIRMED IN THE HANDS OF THE ASSESSEE FOR THE UNEXPLAINED INVESTMENT U/S 69 OF THE ACT MADE FOR THE ALLEGED C ASH DEPOSIT IN THE BANK ACCOUNT OF THE SOCIETY NAMELY SHREE VARDH MAN SAKH SKARITA MARYADIT OF WHICH THE ASSESSEE IS HOLDING T HE POST AS PRESIDENT. WE OBSERVE THAT THE IMPUGNED ADDITIONS OF RS 9,23,93,228/-, RS. 13,90,35,137/-, RS. 17,69,03,922 /-, RS.26,21,59,360/-, RS. 37,02,21,964/- (RS. 34,05,94 ,493 & RS.2,53,43,026/)-, RS. 52,39,28,273/- (RS. 36,54,12 ,434/- & RS. 15,85,15,839/-), RS.74,49,35,922/- (RS.65,07,34,968 /- & RS.9,42,00,954/-) AND RS.49,31,33,630/- (RS.35,16,7 1,541/- & RS.14,14,62,089/-) FOR ASSESSMENT YEARS 2008-09 TO 2015-16 RESPECTIVELY WAS MADE BY THE LD. A.O TO THE INCOME OF THE ASSESSEE ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 45 ON ACCOUNT OF CASH DEPOSITED IN THE BANK ACCOUNT OF THE SOCIETY NAMELY SHREE VARDHMAN SAKH SKARITA MARYADIT. PROTE CTIVE ADDITION WAS MADE IN THE HANDS OF THE SOCIETY AND T HE SUBSTANTIVE ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE FOR UNEXPLAINED INVESTMENT U/S 69 OF THE ACT. 32. WE OBSERVE THAT WHILE ADJUDICATING THE REVENUE S APPEAL IN THE CASE OF ASSESSEE NAMELY SHREE VARDHMAN SAKH SKARITA MARYADIT WE HAVE ALREADY DEALT WITH THIS ISSUE AND HAVE HELD TH AT FIRSTLY THE ADDITION IF ANY TO BE MADE FOR THE ALLEGED CASH DE POSITS IN THE BANK ACCOUNT OF THE SOCIETY ARE TO BE MADE ONLY IN THE H ANDS OF THE SOCIETY AND NOT IN THE HANDS OF THE OFFICE BEARER N AMELY SHRI MANISH KOTHARI SINCE THE SOCIETY IS A SEPERATELY L EGAL ENTITY HAVING ITS PERMANENT ACCOUNT NUMBER AND WORKING UNDER THE REGISTERED BYE LAWS SINCE LAST MANY YEARS. SECONDLY WE HAVE H ELD THAT THE ALLEGED TRANSACTIONS OF CASH DEPOSITS AND CORRESPON DING ENTRIES OF CHEQUE ISSUED WERE NOT IN THE NATURE OF ANY BUSINES S ACTIVITY BUT IT WAS A MERE FACILITATION SERVICES BEING PROVIDED BY THE SOCIETY TO ITS MEMBERS AND OTHER PERSONS IN LIEU OF SERVICE CHARGE AT RS.100/- PER LAKH AND THIRDLY THE ADDITION FOR THE ALLEGED CASH DEPOSITS ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 46 SHOULD BE HIGHER OF THE TWO NAMELY PEAK BANK BALANC E DURING THE YEAR OR THE SERVICES CHARGED AT RS.100 PER LAKH ON THE ALLEGED CASH DEPOSIT DURING EACH OF THE YEAR. 33. IN VIEW OF OUR ABOVE FINDINGS WE HEREBY HOLD TH AT ALL THE ADDITIONS MADE ON SUBSTANTIVE BASIS IN THE HANDS OF THE ASSESSEE U/S 69 OF THE ACT FOR UNEXPLAINED CASH DEPOSITS AT RS 9,23,93,228/- , RS. 13,90,35,137/-, RS. 17,69,03,922/-, RS.26,21, 59,360/-, RS. 37,02,21,964/- (RS. 34,05,94,493 & RS.2,53,43,026/) -, RS. 52,39,28,273/- (RS. 36,54,12,434/- & RS. 15,85,15,8 39/-), RS.74,49,35,922/- (RS.65,07,34,968/- & RS.9,42,00,9 54/-) AND RS.49,31,33,630/- (RS.35,16,71,541/- & RS.14,14,62, 089/-) FOR ASSESSMENT YEARS 2008-09 TO 2015-16 RESPECTIVELY DE SERVES TO BE DELETED. WE ACCORDINGLY ORDER SO AND DELETE THE IM PUGNED ADDITION MADE BY LD. A.O FOR UNACCOUNTED INVESTMENT MADE U/S 69 OF THE ACT FOR ASSESSMENT YEAR 2008-09 TO ASSESSMENT YEAR 2015-16 IN THE HANDS OF ASSESSEE NAMELY MANISH KOTHARI. HOWEVE R WE WOULD LIKE TO MAKE IT CLEAR THAT OUR THIS DECISION OF DEL ETING THE ADDITIONS MADE IN THE HANDS OF THE ASSESSEE FOR ASSESSMENT YE AR 2008-09 TO ASSESSMENT YEAR 2015-16 WITH REGARD TO THE ALLEGED CASH DEPOSIT IN ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 47 THE BANK ACCOUNT HELD IN THE NAME OF SOCIETY SHALL HAVE NO BEARING ON THE ADDITIONS MADE BY THE LD. A.O BUT WHICH HAVE NOT BEEN AGITATED OR CHALLENGED BY THE ASSESSEE BEFORE LD. C IT(A) OR BEFORE US. WE ACCORDINGLY ORDER SO AND ALLOW THIS COMMON G ROUND OF APPEAL RAISED BY THE ASSESSEE FOR ASSESSMENT YEARS 2008-09 TO 2015-16. 34. NOW WE TAKE UP THE NEXT COMMON ISSUE WHICH RELA TES TO THE ADDITION MADE ON THE BASIS OF LOOSE PAPER FOUND DUR ING THE COURSE OF SURVEY AT THE ASSESSEES PREMISES WHICH WAS CARR IED OUT ON 29.9.2014. BRIEF FACTS RELATING TO THIS COMMON ISS UE ARE THAT THERE WAS A SURVEY CONDUCTED AT THE OFFICE PREMISES OF TH E SOCIETY SHREE VARDHMAN SAKH SKARITA MARYADIT U/S 133A OF THE ACT ON 29.9.014. ON THE VERY SAME DAY OF SURVEY U/S 133A OF THE ACT WAS ALSO CONDUCTED AT THE BUSINESS PREMISES OF SHRI MANISH K OTHARI WHO WAS HOLDING THE POST OF PRESIDENT OF THE SOCIETY SH REE VARDHMAN SAKH SKARITA MARYADIT. CERTAIN INCRIMINATING MATER IAL WAS IMPOUNDED IN THE FORM OF SMALL NOTE BOOK, BF-2, LOO SE PAPERS BF 5 & 8. THE YEARWISE ISSUES FOR THE RESPECTIVE ASSESS MENT YEARS ARE SUMMARISED IN THE FOLLOWING MANNER; ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 48 ASSESSMENT YEARS & ISSUE WISE ADDITION :- ISSUE ASST.YEAR AMOUNT GROUND NO. ADDITION ON ACCOUNT OF LOOSE PAPER (BF-2) IMPOUNDED DURING SURVEY RS 4,68,00/- GROUND NO. 3 (AY 2008- 09) ADDITION ON ACCOUNT OF LOOSE PAPER (BF-5) IMPOUNDED DURING SURVEY RS 3,04,27,000/- GROUND NO.4 (AY 2008- 09) ADDITION ON ACCOUNT OF LOOSE PAPER (BF-8) IMPOUNDED DURING SURVEY 19854/- GROUND NO, 5 (AY 2008- 09) ADDITION ON ACCOUNT BROKERAGE /COMMISSION BY MAKING RELIANCE ON STATEMENT OF APPELLANT TAKEN DURING SURVEY (DATED 29/09/14) AND ENTRIES ON LOOSE PAPER IMPOUNDED DURING SURVEY 5,00,000/- GROUND NO. 3 (AY 2009- 10) ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 49 ADDITION ON ACCOUNT OF BROKERAGE /COMMISSION @ 3 % BY MAKING RELIANCE ON STATEMENT OF APPELLANT TAKEN DURING SURVEY (DATED 29/09/14) AND ENTRIES ON LOOSE PAPER IMPOUNDED DURING SURVEY 22,57,243/- 13,21,000/- 9,47,645/- 5,37,559/- 11,98,853/- 4,12,359/- 3.1 & 3.3 (2010-11) 3.1 TO 3.4(2011-12) 3.1 TO 3.4(2012-13) 3.1 TO 3.4(2013-14) 3.1 TO 3.4(2014-15) TO 3.4(2015-16) 2.6 ADDITION ON ACCOUNT OF DECLARATION MADE BY THE ASSESSEE DURING SURVEY PROCEEDINGS 2012-13 2013-14 2014-15 2015-16 5,00,000/- 5,00,000/- 5,00,000/- 82,01,000/- IN CONTINUATION OF GROUND NO. 2.8 (IN ALL THE YEARS) 2.7 ADDITION ON ACCOUNT OF ACCOUNT OF LOOSE PAPER (BF-21) IMPOUNDED DURING SURVEY 2012-13 40,13,720/- IN CONTINUATION OF GROUND NO. 2.8 (IN ALL THE YEARS) 2.8 ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN RESIDENTIAL HOUSE AT 36, ARIVIND NAGAR 2013-14 2014-15 2015-16 13,62,346 /- 36,14,502/- 13,80,657/- IN CONTINUATION OF GROUND NO. 2.8 (IN ALL THE YEARS 35. FROM PERUSAL OF THE IMPUGNED ORDERS WE FIND THA T THE ORDERS OF LD. CIT(A) FOR ASSESSMENT YEAR 2012-13 TO 2015-1 6 (ITA NO.862 TO 865/IND/2019) ARE EX-PARTE AND NOTHING HAS BEEN HELD/ OBSRVED ON MERITS. WE THEREFORE ARE OF THE CONSIDERED VIEW THAT EXCEPT FOR ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 50 THE TWO ISSUE FIRSTLY REOPENING OF THE ASSESSMENT P ROCEEDINGS WHICH ARE ALREADY NOT PRESSED BY THE ASSESSEE FOR ASSESSM ENT YEAR 2008- 09 TO ASSESSMENT YEAR 2015-16 AND SECONDLY THE ISSU E OF ADDITION OF SUBSTANTIVE BASIS FOR THE UNEXPLAINED INVESTMENT U/S 69 OF THE ACT FOR WHICH WE HAVE ALREADY HELD THAT NO ADDITION IS CALLED FOR IN THE HANDS OF ASSESSEE SHRI MANISH KOTHARI FOR ASSES SMENT YEAR 2008-09 TO ASSESSMENT YEAR 2015-16 U/S 69 OF THE AC T FOR THE ALLEGED CASH DEPOSITS IN THE BANK ACCOUNT OF SOCIET Y NAMELY SHRI VARDHMAN SAKH SAHAKARITA MARYADIT AND THE SAME THUS DESERVES TO BE DELETED. ALL THE REMAINING ISSUES RAISED BY THE ASSESSEE IN THE GROUNDS OF APPEAL FOR ASSESSMENT YEAR 2012-13 TO 20 15-16 ARE RESTORED TO LD. CIT(A) FOR AFRESH ADJUDICATION AFTE R AFFORDING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND DIRE CTIONS ARE ALSO GIVEN TO THE ASSESSEE TO NOT TO TAKE UNCESSARY ADJO URNMENTS AND SHOULD FILE NECSSARY DOCUMENTS IN SUPPORT OF ITS CO NTENTION WITH REGARD TO THE IMPUGNED ADDITIONS. IN THE RESULT AP PEALS OF THE ASSESSEE FOR ASSESSMENT YEAR 2012-13 TO 2015-16 ARE PARTLY ALLOWED FOR STATASTICAL PURPOSES. 36. NOW THE EFFECTIVE ISSUES WHICH REMAINS TO BE AD JUDICATED ARE AS FOLLOWS:- ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 51 ISSUE ASST.YEAR AMOUNT GROUND NO ADDITION ON ACCOUNT OF LOOSE PAPER (BF-2) IMPOUNDED DURING SURVEY 2008 - 09 RS 4,68,00/- GROUND NO. 3 ADDITION ON ACCOUNT OF LOOSE PAPER (BF-5) IMPOUNDED DURING SURVEY 2008 - 09 RS 3,04,27,000/ - GROUND NO.4 ADDITION ON ACCOUNT OF LOOSE PAPER (BF-8) IMPOUNDED DURING SURVEY 2008 - 09 19854/ - GROUND NO, 5 ADDITION ON ACCOUNT BROKERAGE /COMMISSION BY MAKING RELIANCE ON STATEMENT OF APPELLANT TAKEN DURING SURVEY (DATED 29/09/14) AND ENTRIES ON LOOSE PAPER IMPOUNDED DURING SURVEY 2009 - 10 5,00,000/ - GROUND NO. 3 ADDITION ON ACCOUNT OF BROKERAGE /COMMISSION @ 3 % BY MAKING RELIANCE ON STATEMENT OF APPELLANT TAKEN DURING SURVEY (DATED 29/09/14) AND ENTRIES ON LOOSE PAPER IMPOUNDED DURING SURVEY 2010 - 11 2011-12 22,57,243/ - 13,21,000/- 3.1 & 3.3 (2010 - 11) 3.1 TO 3.4(2011-12) 37. SUBMISSIONS MADE BY LD. COUNSEL FOR THE ASSESSE E ARE AS UNDER:- (I) AS REGARDS THE ADDITION OF RS.4,68,000/- MADE F OR ASSESSMENT YEAR 2008-09 ON THE BASIS OF LOOSE PAPER BF-2, IT WAS SU BMITTED THAT IN THIS LOOSE PAPER THERE IS NO DATES MENTIONED, THEREFORE THE ADDITION MADE FOR ASSESSMENT YEAR 2008-09 IS NOT WARRANTED. HOWEVER ON PERUSAL ORDER PAPER OF BF-2 PAPER BOOK-10, PAGE 2789 TO 2798 THE DATES ARE FALLING FOR ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 52 FINANCIAL YEAR 2014-15 RELEVANT TO ASSESSMENT YEAR 2015-16. THEREFORE NO ADDITION WAS CALLED FOR DURING ASSESSMENT YEAR 2 008-09. (II) AS REGARDS ADDITION OF RS.3,04,27,000/- MADE F OR ASSESSMENT YEAR 2008-09 BASED ON LOOSE PAPER NO.BF-5 IMPOUNDED DURI NG THE COURSE OF SURVEY IT WAS SUBMITTED THAT PAGE NO.1 OF BF-5 REFE RS TO THE DATES 28.12.2010, 24.12.2010 AND PAGE-4 OF BF-5 MENTIONS THE DATE 13.12.2011. THUS THE ADDITION WAS UNCALLED FOR ASS ESSMENT YEAR 2008- 09. HOWEVER THE TRANSACTIONS MENTIONED IN BF-5 REL ATES TO THE TRANSACTIONS OF PURCHASE AND SALE OF IMMOVEABLE PRO PERTY CARRIED OUT THROUGH BUYERS AND SELLERS THROUGH THE BROKERS AND ASSESSEE IS ONE OF THE THREE BROKERS INVOLVED IN THIS TRANSACTION. THE PERCENTAGE OF TOTAL BROKERAGE IS FROM2 TO 3% AND EFFECTIVELY THE ASSESS EES SHARE IS 0.67% TO 1%. SO THE ADDITION IF ANY TO BE MADE IN THE EFFEC TIVE ASSESSMENT YEAR SHOULD BE FOR THE BROKERAGE OF 0.67% TO 1% ON THE T RANSACTION APPEARING IN THE SEIZED DOCUMENT PAGE 1 & 5 OF BF-5. 38. AS REGARDS GROUND NO.3 FOR ASSESSMENT YEAR 2009 -10 RELATING TO ADDITION OF RS.5,00,000/-, GROUND NO.3.1 & 3.3 F OR ASSESSMENT YEAR 2010-11 FOR ADDITION OF RS.22,57,243/- AND GRO UND NO. 3.1 TO 3.4 FOR ASSESSMENT YEAR 2011-12 FOR THE AMOUNT OF R S.13,21,000/-, IT WAS SUBMITTED THAT THE ADDITION WERE MADE BY THE LD. A.O APPLYING BROKERAGE AND COMMISSION MADE ON THE BASIS OF STATEMENT OF THE APPELLANT TAKEN DURING THE COURSE OF SURVEY. HOWEVER THE ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 53 ADDITION MADE BY THE LD. A.O WAS BY WAY OF APPLYING BROKERAGE RATE OF 3% WHEREAS ACTUAL BROKERAGE RECEIVED BY THE ASSE SSEE RANGING FROM 0.67% TO 1%. THE LD. SR. COUNSEL FOR THE ASSES SEE REFERRED TO THE FOLLOWING WRITTEN SUBMISSIONS:- ADDITION OF RS 5,00,000/- ON ACCOUNT BROKERAGE /C OMMISSION IN A.Y 2008-09 AND ADDITION ON ACCOUNT BROKERAGE /COMMISSION @ 3% IN A.Y 2010-11 TO 2015-16 THE ASSESSEE IN THIS GROUND OF APPEAL HAS CHALLENGE D THE ADDITION OF RS. 5,00,000/- A.Y 2008-09 ON ACCOUNT OF BROKERAGE AN D FOR SUBSEQUENT YEARS RATE AT WHICH OF BROKERAGE /COMMISSION IS CHA RGED I.E. @ 3 AND THERE ON ADDITION MADE IN THE HANDS OF THE APPELLAN T ON ACCOUNT OF BROKERAGE INCOME. THAT THE LD ASSESSING OFFICER HAS REFERRED PAGE NO 1, 6, 18, 21, 24 & 25 OF BF-7, PAGE NO 1 TO 264 0F BF-8, PAGE NO 241 OF B F-14 AND PAGE AS FOUND AND SEIZED AS BF-20 & PAGE NO 89 OF BF-21. THE APPELLANT ON THE BASIS OF BS-10 AND BS-13, PREP ARED A CASH BOOK FROM THE PERIOD FROM 01-04-2008 TO 31-03-2009, SIMI LARLY FOR THE PERIOD FROM 01-04-2009 TO 31-03-2010 AND FROM 01-04-2010 T O 31-03-2011 UP- TO 2014-15. THE LD ASSESSING OFFICER ON THE BASIS O F THAT CASH BOOK ADDED THE FOLLOWING AMOUNT TO THE INCOME OF THE ASS ESSEE. S.NO ASST YEAR CASH RECEIVED BROKERAGE ESTIMATED BY LD AO AND ADDED TO THE INCOME OF APPELLANT REMARKS 1 2009-10 6611678 5,00,000 ON THE BASIS OF STATEMENT ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 54 2 2010-11 7,52,41,468 22,57,243 @3% OF CASH RECEIVED. 3 2011-12 2,29,60,232 13,21, 000 ON THE BASIS OF STATEMENT 4 2012-13 3,15,88,167 9,47,645 @3% OF CASH RECEIVED 5 2013-14 1,79,18,634 5,37,559 @3% OF CASH RECEIVED 6 2014-15 3,99,61,767 11,98,853 @3% OF CASH RECEIVED 7 2015-16 1,37,45,300 4,12,359/- @3% OF CASH RECEIVED IT IS SUBMITTED THAT RATE OF BROKERAGE /COMMISSION I.E. @ 3% TAKEN BY THE LD AO IS FACTUALLY INCORRECT AND ALSO UNJUSTIFIED. IN COMMERCIAL TRANSACTIONS THE AMOUNT OF BROKERAGE/COMMISSION IS ALSO DISTRIBUTED AMONGST THE THREE BROKERS:- ONE BROKER REPRESENT THE SELLER PARTY ONE BROKER REPRESENT THE BUYER PARTY THE APPELLANT, WHO ON BEHALF OF THE BROKER OF THE B UYER NEGOTIATE WITH THE BROKER OF THE SELLER. IT IS SUBMITTED THAT IN THE PROPERTY LINE, THE RATE OF BROKERAGE WAS AROUND 2% IN GENERAL AND THE SAME WAS ALSO DISTRIBU TED AMONGST THE THREE BROKERS AND THEREFORE THE PERCENTAGE OF SHARE OF THE ASSESSING SO CALCULATED COMES TO 0.667% NOT AT 3% AS ADOPTED BY THE ASSESSING OFFICER IN RELEVANT ASSESSMENT YEARS . HENCE, IN THE APPEAL IN HAND THE AMOUNT OF BROKERAGE AT THE MOST CAN BE CALCULATED (0.667% OF AMOUNT RECEIVED IN RELEVANT ASSESSMENT YEAR). THE ASSESSING OFFICER ONLY ON THE BASIS OF STATEME NT OF THE ASSESSEE ADDED AN AMOUNT OF RS.5,00,000/- IN A.Y 2008-08 TO THE INCOME OF THE ASSESSEE AND SAME WAS NOT JUSTIFIABLE MORE SO WHEN THE PROPERTY BROKERAGE INCOME OF THE ASSESSEE ON THE BASIS OF AC TUAL CASH REALIZED AND ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 55 TRANSFER THROUGH THE ASSESSEE WAS TO CALCULATED @ 0 .667% AND THE SAME WAS INCLUDED IN THE REGULAR INCOME OF THE ASSESSEE AFTER REDUCING THE LEGITIMATE EXPENSES AS CLAIMED BY THE ASSESSEE. THAT IN VIEW OF THE ABOVE THE AMOUNT OF BROKERAGE A T THE MOST CAN BE CALCULATED (0.667% OF AMOUNT RECEIVED IN RELEVANT A SSESSMENT YEAR). 39. WITHOUT PREJUDICE TO THE ABOVE SUBMISSIONS LD. SR. COUNSEL FOR THE ASSESSEE ALSO MADE FOLLOWING ALTERNATE SUBM ISSIONS FOR CONSIDERATION:- THAT IN LIGHT OF THE ABOVE SUBMISSION IN REFERENCE TO OTHER ADDITIONS MADE BY THE LD AO AND THEREAFTER ITS EX-P ARTY CONFIRMATION BY THE LD CIT (A), IT IS SUBMITTED THA T THERE IS A GRAVE ERROR IN THE ORDERS PASSED BY THE LOWER AUTHORITIES IN MAKING AND SUSTAINING THE ABOVE ADDITION. THAT THE ORDERS OF L OWER AUTHORITIES WITH RESPECT TO OTHER IMPUGNED ADDITIONS SUFFER FRO M FOLLOWING LEGAL INFIRMITIES & PERVERSITIES : NON- CONSIDERATION OF SUBMISSIONS OF THE ASSESSEE I N THEIR TRUE PERSPECTIVE; NON CONSIDERATION OF MATERIAL & EVIDENCE ON RECORD; NON EXAMINATION OF THE ISSUES INVOLVED IN THE INSTA NT CASE; WRONGFUL ADDITIONS MADE IN VIOLATION OF NATURAL JU STICE AS NO PROPER OPPORTUNITY WAS PROVIDED TO APPELLANT TO PUT -FORTH HIS SUBMISSION AT THE STAGE OF ASSESSMENT PROCEEDINGS & APPELLATE PROCEEDINGS BEFORE CIT (A) ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 56 ABSENCE OF ANY CONCRETE BASIS OR LOGICAL REASONS IN EVALUATING AND IN NOT ACCEPTING THE EXPLANATION AND EVIDENCES OFFE RED BY THE APPELLANT WITH JUDICIAL MATRIX IN SUPPORT OF SUBMIS SION. NO OPPORTUNITY OF CROSS EXAMINATION WAS PROVIDED BY THE LD AO IT IS THEREFORE PRAYED BEFORE THIS HONBLE TRIBUNAL THAT OTHER ADDITIONS MADE IN THE ASSESSMENT YEARS SUFFERS FROM MANY INFIRMITIES WHICH IS LIABLE TO BE SET ASIDE. FURTHE R IF THIS HONBLE TRIBUNAL IS OF OPINION THAT THE WRONGFUL ADDITION A S MADE BY THE LD. A.O. DESERVES TO BE REMANDED TO THE ASSESSING AUTHO RITY, IT MAY KINDLY DIRECT THE ASSESSING AUTHORITY TO PASS FRESH ORDERS IN ACCORDANCE WITH LAW AFTER GIVING PROPER OPPORTUNITY OF HEARING TO THE APPELLANT IN REMAND PROCEEDINGS. 40. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE VEHE MENTLY ARGUED SUPPORTING THE ORDER OF LD. CIT(A). 41. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. APART FROM THE ISSUES RAISED BY THE ASSESSEE FOR ASSESSMENT YEAR 2008-09 TO ASSESSMENT YEAR 2012-13 WE HAVE ALREADY BEEN DEALT BY US IN THE PRECEDING PARAS, TH E ASSESSEE HAS CHALLENGED FOLLOWING ADDITIONS CONFIRMED BY LD. CIT (A) WHICH WERE MADE BY THE LD. A.O ON THE BASIS OF LOOSE PAPERS IM POUNDED DURING THE COURSE OF SURVEY AT THE PREMISES OF THE ASSESSE E U/S 133A OF THE ACT:- ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 57 ISSUE ASST.YEAR AMOUNT GROUND ADDITION ON ACCOUNT OF LOOSE PAPER (BF-2) IMPOUNDED DURING SURVEY 2008 - 09 RS 4,68,00/ - GROUND NO. 3 ADDITION ON ACCOUNT OF LOOSE PAPER (BF-5) IMPOUNDED DURING SURVEY 2008 - 09 RS 3,04,27,000/- GROUND NO.4 ADDITION ON ACCOUNT OF LOOSE PAPER (BF-8) IMPOUNDED DURING SURVEY 2008 - 09 19854/ - GROUND NO, 5 ADDITION ON ACCOUNT BROKERAGE /COMMISSION BY MAKING RELIANCE ON STATEMENT OF APPELLANT TAKEN DURING SURVEY (DATED 29/09/14) AND ENTRIES ON LOOSE PAPER IMPOUNDED DURING SURVEY 2009 - 10 5,00,000/ - GROUND NO. 3 ADDITION ON ACCOUNT OF BROKERAGE /COMMISSION @ 3 % BY MAKING RELIANCE ON STATEMENT OF APPELLANT TAKEN DURING SURVEY (DATED 29/09/14) AND ENTRIES ON LOOSE PAPER IMPOUNDED DURING SURVEY 2010 - 11 2011-12 22,57,243/ - 13,21,000/- 3.1 & 3.3 (2010 - 11) 3.1 TO 3.4(2011-12) 42. AS REGARDS GROUND NO.5 FOR ASSESSMENT YEAR 2008 -09 FOR ADDITION OF RS.19,854/- THERE WERE NO SUBMISSIONS M ADE FROM THE SIDE OF ASSESSE AND IT SEEMS THAT ASSESSEE IS NOT INTERESTED TO PRESS THIS GROUND. WE ACCORDINGLY DISMISS GROUND NO.5 FO R ASSESSMENT ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 58 YEAR 2008-09 AS NOT PRESSED AND CONFIRM THE ADDITIO N OF RS.19,854/-. 43. AS REGARDS GROUND NO.3 FOR ASSESSMENT YEAR 2008 -09 FOR ADDITION OF RS.4,68,000/- IT IS CLAIMED BEFORE US T HAT IN THE LOOSE PAPER NO.BF-2 THERE ARE CERTAIN TRANSACTIONS FALLIN G IN THE FINANCIAL YEAR 2014-15 BUT THE ADDITIONS HAS BEEN MADE DURING ASSESSMENT YEAR 2008-09. CERTAINLY NO ADDITION WAS CALLED FOR ASSESSMENT YEAR 2008-09 HOWEVER SINCE WE HAVE ALREADY SET ASID E THE IMPUGNED ORDER OF LD. CIT(A) FOR ASSESSMENT YEAR 20 15-16 FOR READJUDICATION PURPOSE AND TO DECIDE THE ISSUES ON MERITS THIS ISSUE OF ADDITION BASED ON LOOSE PAPER BF-2 ALLEGED LY MADE AT RS.4,68,000/- IS ALSO SET ASIDE TO LD. CIT(A) WHO S HALL DECIDE ABOUT THE ADDITIONS IF ANY TO BE MADE IN ACCORDANCE WITH LAW IN THE HANDS OF THE ASSESSEE. THUS GROUND NO.3 FOR ASSESSMENT YE AR 2008-09 IS ALLOWED FOR STATASTICAL PURPOSES. 44. AS REGARDS GROUND NO.4 FOR ASSESSMENT YEAR 2008 -09 RELATING TO ADDITION OF RS.3,04,27,000/- MADE ON THE BASIS O F LOOSE PAPER BF-5 WE OBSERVE THAT SOME DATES REFERRED ON THE PAG E 5 OF BF-5 IS 20.12.2010 AND 24.12.2010 AND ON PAGE 4 BF-5 DATE M ENTIONED AS 13.12.2011. THERE IS NO MENTION OF ANY DATE FALLIN G IN ASSESSMENT ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 59 YEAR 2008-09. PRIME FAICE NO ADDITION IS CALLED FOR ASSESSMENT YEAR 2008-09 ON THE BASIS OF THIS LOOSE PAPER. HOWEVER AS REGARDS THE QUANTUM OF ADDITION IS CONCERNED IT IS CLAIMED BEFO RE US THAT THE ALLEGED TRANSACTIUONS ARE OF PURCHASE AND SALE OF P ROPERTY AND THE ASSESSEE BEING ENGAGED IN THIS BUSINESS OF EARNING BROKERAGE ON SUCH TRANSACTIONS OF PURCHASE AND SALE OF IMMOVEABL E PROPERTIES THE INCOME TO BE COMPUTED SHOULD BE BETWEEN 0.67% T O 1% AS NORMALLY THERE ARE THREE BROKERS IN EACH OF SUCH TR ANSACTIONS. 45. IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CAS E WE ARE OF THE VIEW THAT THIS ISSUE ALSO NEEDS TO BE SET ASIDE TO THE CIT(A) FOR FRESH ADJUDICATION. SO FAR AS ASSESSMENT YEAR 2008-09 IS CONCERNED NO ADDITION SEEMS TO BE CALLED FOR HOWEVER IN THE SET ASIDE PROCEEDINGS LD. CIT(A) MAY DECIDE IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE TO CONFIRM THE ADDITION FOR THE RELEVANT ASSESSMENT YEAR TO WH ICH THE TRANSACTION PERTAINS AND ALSO DECIDE WHETHER THE AD DITION SHOULD BE MADE FOR THE AMOUNT MENTIONED IN THE ALLEGED DOCUME NT OR THE ELEMENT OF INCOME I.E. BROKERAGE AS CONTENDED BY LD . SR. COUNSEL FOR THE ASSESSEE. GROUND NO.4 FOR ASSESSMENT YEAR 2008-09 IS THUS ALLOWED FOR STATASTICAL PURPOSES. ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 60 46. NOW WE ARE LEFT WITH THE COMMON ISSUE OF ADDITI ON ON ACCOUNT OF BROKERAGE/COMMISSION FOR ASSESSMENT YEARS 2009-1 0 TO 2011-12 FOR THE AMOUNT OF RS.5,00,000/-, RS.22,57,243/- AND RS.13,21,000/-. WE OBSERVE THAT THE ADDITIONS WERE MADE ON THE BASIS OF STATEMENT GIVEN DURING THE COURSE OF SURV EY AND LD. A.O APPLIED BROKERAGE OF 3% ON THE TRANSACTION APPEARIN G IN THE LOOSE PAPERS. ASSESSEE HAS CONTENDED THAT HIS SHARE OF I NCOME IS HARDLY 0.67% TO 1% AS THERE ARE THREE BROKERS NAMELY ONE T O REPRESENTS THE SELLER, SECOND WHO REPRESENTS THE BUYER AND THI RD THE APPELLANT WHO ON BEHALF OF THE BROKER AND BUYER COMMUNICATES WITH THE BROKER OF THE SELLER. THOUGH THERE SEEMS MERITS IN THE CONTENTION OF THE SR. COUNSEL FOR THE ASSESSEE BUT SINCE WE HAVE ALREADY SET ASIDE THE SIMILAR ISSUE RAISED IN GROUND NO.4 FOR ASSESSM ENT YEAR 2008- 09 WE DEEMED IT PROPER TO SET ASIDE THIS COMMON ISS UE OF COMPUTATION OF BROKERAGE/ COMMISSION ALSO TO LD. CI T(A) TO DECIDE ABOUT THE FINAL RATE OF BROKERAGE TO BE APPLIED WHI CH CAN RANGE ANYWHERE BETWEEN 0.67% TO 3%. NEEDLESS TO MENTION THAT PROPER OPPORTUNITY OF BEING HEARD SHOULD BE PROVIDED TO TH E ASSESSEE TO PRESENT ITS CASE. IN THE RESULT THE COMMON ISSUE R AISED THROUGH GROUND NO.3 FOR ASSESSMENT YEAR 2009-10, GROUND NO. 3.1 & 3.3 ITA NOS. 286 TO 289/IND/2018 ,719 TO 722/IND/2017 & 862 TO 865/IND/2019 SHRI VARDHMAN SAKH SAHAKARITA MARYADIT & MANISH KOT HARI 61 FOR ASSESSMENT YEAR 2010-11 AND GROUND NO. 3.1 TO 3 .4 FOR ASSESSMENT YEAR 2011-12 ARE ALLOWED FOR STATASTICAL PURPOSES. 47. THE COMMON GROUND RELATING TO CHARGING OF INTE REST U/S 234A & 234B OF THE ACT ARE CONSEQUENTIAL IN NATURE WHICH NEEDS NO ADJUDICTION. THUS ALL THE APPEALS OF THE ASSESSEE A RE PARTLY ALLOWED FOR STATASTICAL PURPOSES. 48. IN THE RESULT APPEAL RAISED BY REVENUE VIDE ITA NO.286 TO 289/IND/2018 FOR ASSESSMENT YEARS 2008-09 TO 2011-1 2 ARE PARTLY ALLOWED AND APPEAL RAISED BY THE ASSESSEES VIDE IT A NO.719 TO 722/IND/2017 & 862 TO 865/IND/2019 FOR ASSESSMENT Y EARS 2008- 09 TO 2015-16 ARE PARTLY ALLOWED FOR STATISTICAL PU RPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 11.02.2 021. ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 11 FEBRUARY, 2021 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE